Fed Chair Shock: Trump Says He May Keep Hassett Put, Markets Bet on Warsh
President Donald Trump on Friday cast new uncertainty over his search for the next Federal Reserve chair, openly expressing reluctance to nominate Kevin Hassett, a move that immediately reshaped market expectations and fueled speculation that former Fed Governor Kevin Warsh is now the frontrunner.
During a White House event, Trump praised Hassett’s work as director of the National Economic Council and suggested that elevating him to the Fed would deprive the administration of one of its most effective economic communicators.
“I actually want to keep you where you are, if you want to know the truth,” Trump told Hassett. “If I move him, these Fed guys — certainly the one we have now — they don’t talk much. I would lose you. It’s a serious concern to me.”
Analysts Shift Focus to Kevin Warsh
Trump’s comments took analysts by surprise, as Hassett had long been considered a top contender to succeed Jerome Powell when his term ends on May 15. But the president’s public hesitation immediately shifted sentiment toward Warsh.
Krishna Guha, head of central bank strategy at Evercore ISI, told clients the remarks “catapult Warsh into pole position in the race to succeed Powell as Fed chair.”
Treasury Secretary Scott Bessent, speaking on Fox Business, declined to weigh in on Warsh’s odds but emphasized that “only the president knows” who he will nominate. He added that the candidate will be “someone who is substantial, who cares about the integrity of the Fed, cares about the dual mandate.”
Markets React to Trump’s Remarks
Following Trump’s comments, the dollar rebounded from session lows, while stocks turned negative. Prediction markets also reacted quickly, raising the implied odds that Warsh would be the nominee.
Contract asking who Trump will nominate as Fed Chair (Source: Polymarket)
A Polymarket contract asking who Trump would nominate to lead the Fed shows that odds for Warsh jumped 25% to 59%, while Hassett’s odds plummeted 14% to 18%.
Trump later said he had “in my mind, done” the decision, but refused to disclose the name. He indicated that while the process is advancing, it is not yet finalized.
“We don’t want to lose him,” he said of Hassett. “We’ll see how it all works out.”
Senate Resistance Could Slow Confirmation
Even once Trump has made his choice, the confirmation process may not be smooth. Senator Thom Tillis of North Carolina, a key Republican on the Senate Banking Committee, has vowed to block any nominee until the Justice Department concludes its investigation into the Federal Reserve.
The probe has escalated tensions between the administration and Powell, who has criticized it as an attempt to undermine central bank independence. White House officials have defended the inquiry as necessary oversight.
Trump did not address the dispute Friday, but the standoff adds another layer of complexity to the already delicate process.
Multiple Candidates Still in the Running
Hassett was viewed late last year as the leading contender, but Trump’s search has continued to widen. In an interview with Reuters earlier in the week, Trump said both Hassett and Warsh remained top candidates.
“The two Kevins are very good,” he said, noting that several other individuals are also under consideration.
BlackRock executive Rick Rieder is among the latest names to surface after participating in a final interview for the role, according to Bessent.
A Pivotal Moment for the Federal Reserve
The next Fed chair will step into one of the most challenging macroeconomic environments in recent memory.
Weakening employment data in 2025 forced the central bank to cut rates, while inflation remains stuck above the 2% target. Policymakers remain deeply divided over whether to pursue additional rate cuts or hold steady.
A chair aligned with Trump is expected to push for further cuts, but building consensus within the FOMC may prove difficult — especially if Powell remains at the central bank as a governor after his term as chair expires.
