Former Federal Reserve governor Kevin Warsh has emerged as the new frontrunner to succeed Jerome Powell as Chair of the Federal Reserve.
What Happened: On Tuesday, Polymarket traders assign Warsh a 46% probability to be President Trump’s nominee—up from 39% on Monday and a sharp rise from 11% one week prior.
Kevin Hassett, the current Director of the National Economic Council, and a former chair of the Council of Economic Advisers under Trump, was viewed as the leading candidate in early December with chances north of 80%.
Traders soured on his chances after a CNBC report on Monday cited pushback from high-level people close to Trump.
Hassett currently stands around 41% to be the nominee.
Read Also: Ethereum Slides Below $3,000, But This Is A Time To Buy, Not Sell, Traders Say
Why It Matters: Warsh, a former Fed governor who served from 2006 to 2011, is known for his concerns about expansive monetary policies and emphasis on financial stability.
He was nearly chosen as Fed Chair in Trump's first administration, but was edged out by Powell.
If nominated, Warsh's approach could signal a more cautious stance on interest rate reductions, particularly in light of ongoing inflation pressures and potential fiscal expansions.
This could lead to tempered expectations for aggressive easing in 2026.
On Fed independence, Warsh has advocated for a balanced view—maintaining autonomy while ensuring accountability—which could mitigate concerns about political influence on monetary policy.
Trump has expressed a desire for lower rates, potentially to 1% or below, but a Warsh appointment might preserve the Fed’s traditional separation from executive pressures more effectively than other options.
Hassett, on the other hand, is perceived as more pliable due to the political nature of his past roles and longstanding loyalty to Trump.
Why It Matters: Market participants are closely watching the race, as the eventual nominee could significantly influence short-term interest rates and is expected to weigh in on a potential overhaul of the Federal Reserve.
Read Next:
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.