BlockBeats news: On January 17, U.S. President Donald Trump said today, regarding Kevin Hassett, the director of the National Economic Council at the White House, "I want him to stay in his current position, and we'll see what happens." This statement implies that Trump may have another candidate in mind for the position of Federal Reserve Chair. Market expectations for the Fed chair have shifted from a two-way race between Kevin Hassett and Kevin Warsh to Warsh being the clear front-runner. Notably, before Trump's remarks, Hassett himself had commented, "Kevin Warsh and Rieder would also make great Federal Reserve Chairs." It is possible that Hassett already had some knowledge of Trump's final decision.
According to prediction market Polymarket data, the probability of Haslett receiving the chair nomination has dropped to 15%, comparable to that of Fed Governor Waller, while Kevin Warsh's nomination probability has risen to over 60%, making him the top nomination favorite by a wide margin and leaving other candidates far behind.
Compared to Trump's close ally and "absolute dove" Hasset, Kevin Warsh holds a more hawkish stance. However, the market expects Warsh to still support rate cuts while advancing the balance sheet reduction (QT). In early 2025, Warsh proposed the view that "inflation is a choice," arguing that inflation is not caused by supply chain issues or geopolitical factors, but rather by the Federal Reserve's own policy decisions. Warsh is extremely optimistic about the U.S. economic outlook, believing that AI and deregulation will lead to a productivity boom similar to that of the 1980s.