Topline
President Donald Trump is set to announce former Fed official Kevin Warsh as his pick to replace Jerome Powell as central bank chairman, according to multiple reports, while Trump himself announced he will announce his choice on Friday morning.
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Key facts
The Wall Street Journal reported that Trump’s advisors were informed of Trump’s decision, and this was also confirmed by the New York Times And Bloomberg.
Warsh was among the four top candidates for the role, but the Times and Bloomberg noted that no decision was final until Trump made his announcement on Friday morning.
Speaking to reporters at the screening of First Lady Melania Trump’s documentary of the same name, “Melania,” Trump said he will make the announcement Friday morning.
Warsh was considered a contender for the job eight years ago when Trump chose Powell, and the president seemed to allude to this, saying: “A lot of people think this [his pick] is someone who could have been there a few years ago.”
Warsh served on the Federal Reserve Board of Governors from 2006 to 2011.
How have the betting markets responded?
In late December, online betting markets predicted that Kevin Hassett, director of the National Economic Council, would be the front-runner to replace Powell as chairman of the Federal Reserve. However, since the beginning of the new year, the odds began to change in Warsh’s favor. Hassett’s odds peaked at around 84% Polymarkt in December, and now it has fallen to 1%. At the beginning of this week, BlackRock director Rick Rieder was the favorite of the prediction markets among bookmakers Kalshigiving him a 50% chance, compared to Warsh’s 29%, with Polymarket bettors giving them similar odds. However, since Trump’s comments on Thursday evening, both markets have swung in Warsh’s favour, with bookmakers predicting he now has a 94-95% chance of securing the nomination. Trading volume for Federal Reserve Chair bets exceeded $307 million on Polymarket and $90 million on Kalshi.
What to pay attention to
Trump’s nominee will have to be confirmed by the Senate and the path to that end may not be easy. One key GOP lawmaker, who sits in the Senate[’s Banking Committee, Sen. Thom Tillis, R-N.C., has said he will block any Fed nominees until the U.S. Justice Department resolves its probe into Powell and the central bank’s renovation of its Washington building. Tillis reiterated his stance on Thursday, telling reporters: “The Fed noms are not going to change until the investigation and potential indictment of Chair Powell is completed…DOJ’s got to decide when I lift those holds. It gets lifted the day that case is adjudicated or withdrawn.”
Key Background
Powell has been one of Trump’s top targets for criticism and ridicule since the president started his second term last year, disagreeing with the majority of the chair’s decisions. Trump’s Department of Justice launched an investigation into Powell, who cannot be simply fired by the president, this month over alleged false statements he made in testimony about a $2.5 billion renovation of the Federal Reserve’s headquarters, which Powell has vehemently denied. Former Fed Governor Kevin Warsh, member of the Federal Reserve Christopher Waller, National Economic Council chief Kevin Hassett and BlackRock executive Rick Rieder are possible candidates to take over for Powell, who has not yet confirmed if he will stay on the Fed board following his term as chair.
Further Reading
Trump Claims US Should Pay World’s ‘LOWEST’ Interest Rates After Fed Paused Cuts (Forbes)
Why The Trump Administration’s Investigation Against Jerome Powell May Not Succeed (Forbes)
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