Former Federal Reserve Governor Kevin Warsh is rapidly emerging as a top contender for the next Fed chair after JPMorgan Chase CEO Jamie Dimon publicly declared he would make a "great chair," triggering a sharp spike in his prediction market odds.
Latest data as of Saturday shows Warsh's nomination probability surged by 17 and 24 percentage points on Kalshi and Polymarket prediction platforms respectively. This dramatic shift signals a major reassessment of market expectations for the Fed's future leadership.
Kalshi's data presents a clearer picture: Warsh's soaring odds are rapidly closing the gap with frontrunner Kevin Hassett, whose probability has been declining—though Hassett still leads with 50% odds. This indicates that while Warsh's chances have improved significantly, Hassett maintains a solid advantage for now.
The sudden movement stems from two key developments. First, President Trump revealed Friday he's narrowed his search to "two Kevins"—Warsh and White House NEC Director Kevin Hassett—as potential successors to Chair Powell. Second, Dimon threw his weight behind Warsh during a private asset management CEO meeting in New York on Thursday.
Trump's Shortlist: The 'Two Kevins' In a Friday interview, Trump confirmed he's focusing on two candidates after a 45-minute Oval Office meeting with Warsh on Wednesday. The President outlined clear selection criteria: "(Warsh) believes you have to lower rates—everybody I speak to does," said Trump, who has consistently criticized Powell's Fed for resisting deeper rate cuts amid inflation concerns. Following Wednesday's 25-basis-point cut (the third consecutive reduction), Trump argued the move should have been "at least double" in size.
Trump also emphasized his desire for consultation on monetary policy with the next chair: "I'm not saying he has to do what we say, but...I'm a voice that should be listened to," he told reporters, suggesting rates should fall to "1% or maybe less" within a year.
Wall Street's Influential Backing Warsh received crucial indirect support from Dimon, who reportedly told Wall Street executives at the closed-door meeting that he agreed with Warsh's writings about the Fed. Notably, Dimon reportedly added that Hassett would likely cut rates more aggressively if chosen—a comment adding nuance to market interpretations. Earlier this year, Dimon had stressed the Fed's independence as "absolutely critical," warning that presidential interference often backfires.
Policy Divergence Between Candidates Markets are closely scrutinizing potential policy differences. Some bond investors worry a Hassett-led Fed might prioritize growth over price stability through aggressive easing—a stance that could disrupt Treasury markets and challenge bond portfolios. As the decision nears, candidates' past statements and policy positions face intensifying scrutiny, with any developments potentially triggering asset price swings.
Candidate Profiles: Kevin Hassett: The former White House insider is seen as more aligned with Trump's preferences, having publicly supported aggressive rate cuts. Some on Wall Street view him as having a stronger "implementer" reputation.
Kevin Warsh: The ex-Fed governor enjoys support from Wall Street leaders like Dimon but faces skepticism within the central bank due to his post-departure criticisms. Some consider his pre-2008 crisis stance as "excessively hawkish."
With Trump escalating public pressure for deeper rate cuts, the Fed chair race is heating up. Treasury Secretary-led vetting continues, with Trump expected to interview more candidates next week. The ultimate choice between a Wall Street-trusted "independent" or a White House-favored "loyalist" will be revealed in coming weeks.
Comments