Federal Reserve Chairman Jerome Powell's term ends in May this year. But market participants are already guessing who U.S. President Donald Trump will choose as his successor.
It initially seemed like Kevin Hassett would be the choice, but now more are pointing to BlackRock's Chief Investment Officer Rick Rieder.
Markets interpret Trump's signals from Davos
Rieder receives a lot of support on prediction platforms. Both Polymarket and Kalshi give him a 45% chance of being nominated, which is more than candidates like Fed Governor Christopher Waller and former Fed official Kevin Warsh.
At first glance, this may seem like a typical game, as Trump's administration has often hinted at possible candidates for the Fed. But during a recent CNBC interview in connection with the World Economic Forum in Davos, Trump called the BlackRock CEO 'very impressive.'
"I can say that we are down to three, but there are two left. And I can probably say that there is really only one, in my opinion," said Trump.
Many therefore believe that Rieder is the favorite.
According to Bloomberg, Rieder stands out for several reasons. Unlike Waller or Warsh, he has never worked at the Federal Reserve, and he is therefore seen as more independent. Rieder has also shown interest in implementing changes at the Fed.
But this is not the first time Trump has stated that he has decided on a candidate.
Why Hassett is no longer popular
A month ago, Hassett became the most talked-about candidate to succeed Powell.
As head of the US National Economic Council (NEC), he expressed mild opinions on interest rates and closely followed Trump's economic line.
Therefore, Trump strongly supported Hassett as a potential Fed chief. But less than two weeks ago, he changed his mind and now prefers that Hassett remains as head of the NEC.
Polymarket shows that Hassett's chances have dropped to 8%.
It doesn't matter who replaces Powell, Trump has been clear that he wants to see lower interest rates. If this happens, the cryptocurrency market may feel the difference first.
What Fed rate cuts mean for crypto
Lower interest rates often mean more liquidity. For consumers, this means cheaper loans and usually a greater willingness to take risks.
If the Federal Reserve, under new leadership, continues to lower interest rates, Bitcoin and Ethereum could get a boost.
But it is important under what conditions interest rates are lowered.
In recent months, the Trump administration has repeatedly questioned the independence of the Federal Reserve, which has led to negative reactions in the bond markets and created concerns in the cryptocurrency market.
If Trump continues to pressure the next Fed chief, the outlook for the cryptocurrency market could worsen.
