Prediction Markets Signal a Clear Favorite to Replace Powell as Fed Chair

Source: Coindoo Original Title: Prediction Markets Signal a Clear Favorite to Replace Powell as Fed Chair Original Link: Speculation over who will lead the US central bank next is no longer confined to Washington insiders. Financial markets have started making their own judgment, and one name is increasingly dominating those expectations.

After Donald Trump publicly stated that he has already chosen a successor to current Fed Chair Jerome Powell—while deliberately keeping the identity secret—investors quickly turned to prediction markets for clues. Those markets are now sending a clear signal.

Key Takeaways

• Prediction markets increasingly favor Kevin Warsh as the next Fed Chair
• Traders are betting on Trump’s preference for lower interest rates
• Market expectations are driven by political signals, not official confirmation

Markets settle on a frontrunner

On prediction markets, traders have coalesced around Kevin Warsh as the most likely candidate to take over the Federal Reserve. His odds have steadily pulled away from the rest of the field, suggesting conviction rather than short-term betting noise.

Kevin Hassett currently sits in second place, while Christopher Waller and Rick Rieder remain far behind. Rieder briefly gained attention after reports surfaced that he had been interviewed by Trump, but that momentum faded quickly as markets reverted to Warsh.

Why traders are gravitating toward Warsh

Warsh checks several boxes that markets believe align with Trump’s thinking. He previously served as a Federal Reserve governor, giving him direct policy experience and institutional credibility. During Trump’s first term, Warsh was already considered a serious candidate for the top job, narrowly missing out.

More importantly for investors, Warsh is widely associated with a preference for easier financial conditions. His past commentary has leaned toward lower interest rates and skepticism of overly tight monetary policy—an approach that fits neatly with Trump’s repeated criticism of the Fed’s current stance.

In short, markets are not betting on personality. They are betting on policy direction.

Betting on signals, not announcements

Prediction markets are responding less to formal developments and more to inference. Trump’s refusal to name his pick has left a vacuum, and traders are filling it by triangulating his past decisions, public comments, and ideological preferences.

This pattern is familiar. In previous cycles, traders attempted to front-run Fed leadership changes long before official announcements. Similar dynamics have already appeared again, with odds also shifting around other Trump-aligned figures such as Judy Shelton.

Trump fuels uncertainty by design

Trump added to the intrigue during a recent interview, reiterating that he has made up his mind but will not discuss it publicly. When directly asked about Hassett, he declined to comment, reinforcing the idea that markets are left to read between the lines.

What Trump has been explicit about is his dissatisfaction with Powell. With Powell’s term ending in May, Trump has argued that current interest rates are too restrictive and has openly suggested that support for lower borrowing costs is a non-negotiable trait for the next chair.

Independence concerns return to the spotlight

Those remarks have revived long-standing concerns about the Federal Reserve’s independence. The Fed is designed to operate free from political pressure, yet Trump’s framing of rate alignment as a prerequisite has unsettled economists and policymakers.

The next chair will face a delicate balancing act: managing inflation risks, employment conditions, and financial stability while markets remain hypersensitive to every policy signal.

What the odds really mean

Kevin Warsh’s dominance in prediction markets does not confirm anything. But it does reveal how investors are interpreting Trump’s messaging and positioning accordingly.

Until the White House names a successor, speculation will continue. For now, markets appear to have made their choice—well before Washington has.