Fed Chair Race Takes a Surprising Turn: Warsh Overtakes Hassett, Trump's Interest Rate Gambit Places a New Piece
US Federal Reserve Chair Race Shifts: Warsh Surpasses Hassett as Trump's Top Pick
In a surprise turn of events, President Trump confirmed to The Wall Street Journal that former Fed Governor Kevin Warsh has become the leading candidate for the next Federal Reserve Chair, overtaking previously favored Kevin Hassett. This shift followed a 45-minute meeting where Warsh aligned with Trump’s desire for lower interest rates.
Warsh’s Wall Street experience and previous role at the Fed during the 2008 financial crisis distinguished him from the more academic Hassett. Market probabilities reflected the change, with Hassett’s odds dropping from 85% to 52%, while Warsh’s rose to 38%.
Trump has repeatedly criticized current Chair Jerome Powell for not cutting rates aggressively enough, and even suggested the Fed should consult the president on rate decisions—a direct challenge to the central bank’s independence. Other candidates include Fed Governors Christopher Waller and Michelle Bowman, and BlackRock’s Rick Rieder.
Historical parallels were drawn to Nixon-era political pressure on the Fed, which led to high inflation. ECB President Christine Lagarde warned that political interference poses a “very serious threat” to global economic stability.
Wall Street reacted cautiously, with Jamie Dimon noting both candidates' strengths but acknowledging Warsh’s potential to be an “outstanding chair.” Powell, whose term ends in May, aims to hand over a stable economy but has consistently resisted Trump’s calls for deeper rate cuts.
The outcome of this selection will significantly influence global financial markets and test the Fed’s independence in the years ahead.
marsbit12/14 01:53
