Topline
President Donald Trump on Friday announced he will nominate Kevin Warsh—a former Federal Reserve Governor—as his pick to succeed Jerome Powell as the chair of the central bank.
Kevin Warsh, former governor of the US Federal Reserve, during the International Monetary Fund (IMF) and World Bank Spring meetings at the IMF headquarters in Washington, DC.
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Key Facts
Announcing the decision on Truth Social, Trump wrote that he has “no doubt” that Warsh “will go down as one of the GREAT Fed Chairmen, maybe the best.”
The post ran through various offices previously held by Warsh and added, “he is ‘central casting,’ and he will never let you down.”
Speaking to reporters at the screening of First Lady Melania Trump’s self-titled documentary, “Melania,” on Thursday night, Trump had said he’ll make the announcement on Friday morning.
Warsh was considered a contender for the job eight years ago, when Trump chose Powell, and the president appeared to allude to this, saying: “A lot of people think that this [his pick] is somebody that could’ve been there a few years ago.”
Warsh previously served on the Federal Reserve’s Board of Governors from 2006 to 2011.
How Have The Betting Markets Reacted?
In late December, the online betting markets predicted that National Economic Council Director Kevin Hassett was the front-runner to replace Powell as Federal Reserve chair. However, the odds began shifting in Warsh’s favor since the start of the new year. Hassett’s odds peaked at around 84% on Polymarket in December, and now he’s down to 1%. At the start of this week, BlackRock executive Rick Rieder was the prediction markets’ favorite with bookmakers on Kalshi, giving him a 50% chance compared to Warsh’s 29%, with Polymarket bettors giving them similar odds. However, since Trump’s remarks on Thursday night, both markets have swung in Warsh’s favor, with bookmakers predicting he now has a 94-95% chance of getting the nomination. Trading volume for bets on the Federal Reserve Chair crossed $307 million on Polymarket and $90 million on Kalshi.
What To Watch For
Trump’s nominee will need to be confirmed by the Senate and the path for this may not be straightforward. One key GOP lawmaker, who sits on 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)