The term of Federal Reserve Chairman Jerome Powell ends in May this year. Nevertheless, users of prediction markets are already placing their bets on whom US President Donald Trump will choose as his successor.
Previously, Kevin Hassett was mentioned, but now the focus is shifting to Rick Rieder, Chief Investment Officer at BlackRock.
Reading the market Trump's Davos signals
Rieder is currently performing strongly on prediction platforms. Both Polymarket and Kalshi give him a 45% chance of receiving the nomination. This puts him ahead of other candidates such as Fed Governor Christopher Waller and former Fed official Kevin Warsh.
At first glance, this may not seem like a remarkable prediction, given the long history of the Trump administration mentioning possible Fed candidates. But during a recent interview with CNBC at the World Economic Forum in Davos, Trump described the CEO of BlackRock as 'very impressive.'
I would say we are back to three, but actually there are two. And actually, I think it might just be one, in my head, Trump said.
There is speculation that Rieder is the favorite.
According to Bloomberg, Rieder stands out from the other candidates in several ways. Unlike Waller or Warsh, he has never worked at the Federal Reserve. This makes him seen as less connected to the institution. Rieder has also indicated that he is willing to implement changes at the Fed.
Yet it would not be the first time Trump says he has already made his choice.
Why Hassett fell out of favor
A month ago, Hassett was still the main name mentioned to succeed Powell.
As director of the US National Economic Council (NEC), he has repeatedly expressed cautious ideas about interest rates, aligning his economic vision well with Trump's agenda.
For that reason, Trump initially strongly supported Hassett as a possible Fed chair. But less than two weeks ago, Trump changed his mind and indicated that he would prefer to keep Hassett at the NEC.
According to Polymarket, the chance of Hassett being chosen has dropped to 8%.
Whoever ultimately succeeds Powell, Trump has made it clear that he wants lower interest rates. If that happens, the crypto markets will likely respond the fastest.
What a Fed rate cut means for crypto
Lower interest rates usually provide more liquidity. For consumers, this means cheaper borrowing and often more willingness to take risks.
If the Federal Reserve, under new leadership, continues to lower rates, Bitcoin and Ethereum could potentially benefit from an upward movement.
But the conditions under which rates are lowered are very important.
In recent months, the Trump administration has repeatedly questioned the independence of the Federal Reserve, causing negative reactions in the bond markets and creating volatility in the crypto market.
If Trump continues to exert pressure on the next Fed chair, the outlook for the crypto market could worsen.