BlackRock executive Rick Rieder has seen his odds of winning the Federal Reserve Chair competition skyrocket, marking a new development in the months-long drama over the leadership position. On January 23, Bloomberg reported, citing people familiar with the matter, that BlackRock executive Rick Rieder has attracted President Trump's attention with his demeanor, which fits the image of a central bank chief, and a series of ideas for reforming the Fed. The previous day, Trump stated he had finished interviewing candidates and had a choice in mind, noting that both Rick Rieder and Kevin Warsh were strong contenders. Treasury Secretary Bessent indicated that Trump could announce the decision as early as next week. It was reported that when Trump administration officials solicited investor views on the shortlist of candidates, Rieder received positive feedback from bond market participants. At the World Economic Forum in Davos this week, corporate executives and investors also privately expressed support for Rieder. On the prediction website Polymarket, Rieder's probability of becoming Fed Chair surged this week from 6% to 49%, jumping to the top spot.
However, a concern has recently surfaced within Trump's inner circle: whether Rieder, if appointed, would follow the President's intent for rapid interest rate cuts or adopt an independent stance. Wall Street Pedigree and Policy Stance According to reports, Rieder's Wall Street credentials and openness to reforming the Fed have strengthened his advantage in the competition for the top Fed job. As BlackRock's Chief Investment Officer of Global Fixed Income, he manages approximately $2.4 trillion in bond strategies; his career began at Lehman Brothers, making him a seasoned market veteran. Unlike the other three final candidates, Rieder has never held a position within the Federal Reserve system and is therefore seen as unconstrained by the Fed's traditional thinking or internal relationships. His critical views of the Fed have also attracted Trump, who praised him as "impressive" in a media interview this week. Wall Street Insights noted that Rieder recently stated publicly that post-rate-cut interest levels are "still too high for the housing market to regain vitality," pointing out that smaller businesses and younger families, which are more reliant on debt, are still struggling. He believes the inflation threat is a "problem of the past" and that the Fed should focus more on the recently weakening labor market. Tight monetary policy could have unintended distributional effects, such as stimulating spending by wealthy asset owners while harming small businesses and younger workers. Regarding the balance sheet, Rieder said the Fed should stop reducing its holdings to avoid turmoil in funding markets. However, Rieder is viewed by some investors as a pragmatist rather than a theorist, making him more likely to uphold the Fed's institutional independence. An executive from a major US asset management firm stated:
Rieder is not an ideologue; he is more pragmatic. He is more likely to be concerned with his future historical assessment and also values the long-term reputation and foundation of the Fed as a critical institution.
The market expects he will adopt a data-driven approach, seeking a balance between responding to White House demands and maintaining the central bank's independence. Selection Process Nearing Conclusion The contest is currently among four individuals: Rieder, Hassett, current Fed Governor Waller, and former Fed Governor Warsh. Trump said on Thursday that he had completed candidate interviews and had a choice in mind but did not reveal further details. Treasury Secretary Bessent, who has led the search for a Fed Chair for months, said Trump could announce a decision as early as next week. Whoever is ultimately nominated will need to go through a Senate confirmation process. In the US Senate Banking Committee, Republicans hold only a slim 13-11 majority. White House spokesperson Kush Desai said in a statement:
Any reporting on the Fed Chair nomination process is pure speculation until President Trump makes an announcement.
Trump has stated he wants a central bank chief who is eager to cut interest rates. Hassett, one of Trump's most senior economic advisors, was previously considered a frontrunner for the position. Several Republican senators have publicly expressed concern about the Fed's independence and privately questioned whether Hassett would be too compliant with the President's wishes. But Wall Street Insights noted that Trump said last week he might prefer to keep Hassett at the White House to lead economic policy messaging. As of Saturday, Warsh's odds had fallen to 33% from 64% earlier in the week.
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