In a dramatic twist to the Federal Reserve chairmanship race, former Governor Kevin Warsh has surged ahead as the likely pick for President Trump’s nominee. The shift came after Trump publicly signaled his preference for keeping National Economic Council Director Kevin Hassett in his current role, leaving Warsh as the strong front-runner.
Trump’s Remarks Spark Surge in Warsh’s Odds
The race to lead the Federal Reserve shifted significantly on Friday, January 16, 2026, as President Trump made an offhand remark endorsing Hassett’s current position. Speaking at the White House, Trump expressed admiration for Hassett’s work as economic adviser and hinted at keeping him in that role rather than appointing him as Fed chair. This public endorsement of Hassett—rather than a full endorsement of his candidacy for the Fed—prompted prediction markets to reassess the situation.
By Friday afternoon, the odds for Warsh’s nomination surged to 60% on Polymarket, while Hassett’s chances dropped dramatically to just 17%. Other contenders, including current Fed Governor Christopher Waller and BlackRock’s Rick Rieder, saw their odds remain low, with Waller at around 15% and Rieder trailing even further at 6%. The change was stark given that just days earlier, Warsh and Hassett were locked in a tight race, but Trump’s comments tipped the scale decisively in Warsh’s favor.
Political observers have noted that while Trump’s statements were not definitive, they have positioned Warsh as the clear front-runner. Krishna Guha of Evercore ISI remarked that although Trump enjoys the drama of public uncertainty, Warsh is now widely seen as the likely candidate to succeed Jerome Powell as Fed chair. Powell’s term expires in May 2026, though he could remain as a board member until 2028.
Before Trump’s public comments, Hassett had acknowledged the shifting dynamics, expressing that Warsh and Rieder would also be strong contenders for the Fed chair position. This signaled that Hassett might have sensed the writing on the wall regarding Trump’s potential pick.
Warsh, known for his hawkish views on monetary policy, is expected to continue pushing for rate cuts while also advocating for quantitative tightening (QT), or the reduction of the Fed’s balance sheet. His views on inflation—arguing that it is driven by the Fed’s policies rather than external factors—have further set him apart from other candidates.
Meanwhile, the current Fed chair, Jerome Powell, has found himself embroiled in controversy, with a criminal investigation hanging over him after accusations of lying during congressional testimony. Trump has frequently criticized Powell for not acting swiftly enough on interest rates, though Powell’s future remains uncertain as his term ends in May 2026.
As the race continues, Warsh’s odds continue to climb, and markets remain focused on Trump’s eventual decision. With high stakes for both financial markets and the White House, all eyes are on the President as he prepares to name the next leader of the Federal Reserve.
