Trump Narrows Fed Chair Pick to Kevin Warsh and Kevin Hassett - Decision Looms

Two Kevins, one chair. The next Federal Reserve chief will come down to a choice between two starkly different visions for American monetary policy.

The Contenders

On one side, Kevin Warsh—a former Fed governor with Wall Street pedigree and a hawkish reputation. He’s the candidate markets whisper about when they fear the punch bowl might get taken away. On the other, Kevin Hassett—an economist known for his supply-side cheerleading and a Trump loyalist who’s never met a tax cut he didn’t like. It’s institutional credibility versus political allegiance.

What’s at Stake

This isn’t just about who gets the fancy office. The Fed chair controls the world’s most powerful printing press. Their call on interest rates doesn’t just move bonds—it shakes crypto markets, tech valuations, and the very foundation of modern portfolio theory. A dovish pick could mean more cheap money sloshing into risk assets. A hawk could send a chill through every over-leveraged balance sheet from Silicon Valley to Satoshi Street.

The Crypto Angle

Digital asset traders are watching this like a hawk—or maybe a dove. A Warsh-led Fed might mean tougher talk on inflation and a stronger dollar, traditionally a headwind for crypto. A Hassett Fed could prioritize growth, keeping liquidity taps open and potentially fueling the next speculative mania. Either way, the era of predictable, boring central banking is over.

One thing’s certain: Wall Street will over-analyze every tweet and rumor, proving once again that finance is just astrology for people who own too many suits. The real decision? Whether America’s monetary future rests with a central banker or a political operator. Place your bets.

Traders push Warsh’s odds as Trump narrows Fed choices

Within days, Warsh’s odds of becoming the next Fed chair soared from roughly 12% to above 38%. The MOVE followed reports that Trump has trimmed his list to two finalists. Kevin Hassett remains the favorite to win. But his lead has weakened.

Now, after Trump went public with his praise, traders recognize an actual path ahead for Warsh. Shareholders consider the Fed chair race as key. Trump has been vocal about slashing interest rates. He said that the United States should have the lowest rates of any major economy. That position matters to markets.

Most traders expect the next Fed chair to advocate for quicker and more aggressive rate cuts than the existing stance. Warsh is viewed as open to that transition. His previous criticism of persistently high rates resurfaces in current debates.

That has helped bolster market confidence that he’s more in line with Trump’s economic priorities. Trump himself has said that Warsh is among his biggest choices. He has also confirmed that he interviewed several candidates in recent days. 

Warsh is reported to have been robust in those discussions. Other candidates continue to be considered. They are Fed Governors Chris Waller and Michelle Bowman, as well as Rick Rieder of BlackRock. 

However, attention has shifted increasingly to Warsh and Hassett. Wall Street backing has also helped fuel Warsh’s momentum. Jamie Dimon, JPMorgan Chase’s chief executive, has signaled support for Warsh as a credible and steady option. That backing has reverberations across financial markets.

Critics, on the other hand, have expressed concern. Some lawmakers fear that Trump’s selections might erode the Fed’s independence. They say pressure to cut rates quickly could aggravate inflation risks. Trump brushed those fears aside. He has made lower rates a litmus test for his next Fed chair.

Markets bet on aggressive Fed rate cuts

The Fed now fears small rate cuts by 2026. However, traders believe Trump will quickly move to cut rates further when he appoints a proponent of rate cuts. Most market indicators currently suggest that a few rate cuts will occur next year.

Some have three cuts in mind, a far cry from the Fed’s median view. Chicago Fed President Austan Goolsbee recently stated that the committee could cut more than the current forecast if inflation continues to cool. His comments worked to reinforce market perceptions.

Depending on whom the president picks to replace Powell as Fed chair, it could be a decisive factor. A Warsh nomination may also mark a more rapid pivot to looser monetary policy.

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