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hasset

The candidate for the Federal Reserve Chair has changed: Hassett may withdraw, and Walsh has become the frontrunner

The White House economic advisor and director of the National Economic Council, Kevin Hassett, recently stated that Trump is more likely to want him to continue in his current position at the White House. This statement has been interpreted by the market as a sign that he is essentially withdrawing from the race for the next chairman of the Federal Reserve.After Trump publicly released this signal, the prediction market quickly adjusted its expectations. Data from Kalshi and Polymarket shows that the probability of former Fed governor Kevin Walsh becoming the next chairman of the Federal Reserve has surged to about 60%, clearly leading; Hassett's chances have dropped to about 15%–16%, while current governor Christopher Waller stands at about 13%–14%. Previously, Walsh and Hassett were considered evenly matched.Analysts point out that Walsh has become the "clear frontrunner" for the first time, but Trump has a history of changing his mind on personnel issues, leaving the final outcome uncertain. Other major candidates still include Waller and BlackRock executive Rick Rieder.Meanwhile, the judicial investigation surrounding the Federal Reserve's headquarters renovation project adds uncertainty to the chairman selection process and has reignited market concerns about the Fed's independence. Treasury Secretary Mnuchin downplayed the related impact, stating that the market is generally stable and that the Senate is expected to accept Trump's final nominee.Current Fed Chairman Powell's term will end on May 15. Trump has stated that he will announce his successor within this month but has not provided a specific timeline.

Trump's pressure on the Federal Reserve is "counterproductive," hawkish candidate Walsh overtakes Hassett in winning chances

After the U.S. Department of Justice launched an investigation into Federal Reserve Chairman Powell, the situation began to change in a direction contrary to Trump's expectations. The probability of Powell remaining in his position until 2028 after his term ends in May has started to rise, while the chances of the more hawkish candidate for the next chairman, Warsh, have begun to surpass those of Hassett. Trump may find himself in a year-long game with the Federal Reserve.Polymarket data shows that shortly after Powell released a video responding to the investigation on January 11, the probability of him leaving the Federal Reserve Board by the end of May and by the end of the year both plummeted. Currently, bettors believe the probability of Powell leaving the Federal Reserve by May 30 has dropped from 74% earlier this month to 45%, and the probability of him stepping down by the end of the year has decreased from 85% to 62%.The prediction market has also adjusted its expectations for Trump's ally Kevin Hassett being nominated to succeed Powell as Federal Reserve chairman. Before and after the news of the U.S. Department of Justice investigation broke, the more hawkish candidate Kevin Warsh began to gain support over Hassett in Polymarket.Policy analyst Dan Clifton stated that since last summer, there has been an informal agreement between Trump and Powell—if Powell agrees to leave the Federal Reserve when his term ends in May, Trump would not challenge the Federal Reserve's multi-billion dollar renovation project. Trump had previously harshly criticized the renovation plan, but his criticism of the Federal Reserve has diminished in the second half of last year. This bottom line was broken last Sunday, making it more likely for Powell to remain at the Federal Reserve as an ordinary board member. By continuously attacking Powell personally, it is likely to end up being a futile effort.
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