Kevin Warsh Surges Ahead As Trump Rethinks Fed Chair

The race to become the next chair of the Federal Reserve—one of the most consequential economic appointments in the United States—has taken a dramatic turn, as President Donald Trump signaled a preference to keep top economic adviser Kevin Hassett in his current White House role. This unexpected twist has catapulted former Fed Governor Kevin Warsh to the front of the pack, just as controversy swirls around the current chair, Jerome Powell, and the political stakes for the central bank’s independence reach new heights.

It all unfolded on January 16, 2026, when President Trump, speaking after lauding Hassett’s recent television appearance, declared, “I actually want to keep you where you are, if you want to know the truth. Kevin Hassett is so good.” According to The Economic Times and other outlets, Trump’s remarks were more than just friendly praise—they were a signal to the political and financial world that Hassett was unlikely to be moved to the Fed’s top job. Trump went further, expressing his concern that, “If I move him, these Fed guys—certainly the one we have now—they don’t talk much. I would lose you. It’s a serious concern to me.” The president’s comments also included a nod to White House Chief of Staff Susie Wiles, underscoring the administration’s desire to keep Hassett’s communication strengths close at hand.

The reaction was immediate. Betting and prediction markets, always quick to pounce on the latest developments out of Washington, saw Hassett’s odds of becoming Fed Chair plummet. On Kalshi, his chances dropped from 35% earlier in the day to just 15% after Trump’s remarks, while on Polymarket, they fell to 16%. Meanwhile, Kevin Warsh’s odds surged, reaching approximately 60% on both platforms. Current Fed Governor Christopher Waller, another contender, stood at 13-14%—a distant third.

But why the sudden shift in fortunes for the “two Kevins” at the heart of this contest? The answer lies in a complex blend of politics, controversy, and the ever-present question of central bank independence. Kevin Hassett, once the leading candidate, saw his support evaporate after comments he made earlier in the week on CNBC. Hassett had defended a Justice Department criminal investigation into sitting Fed Chair Jerome Powell—a probe that Powell himself claims is being wielded as a political tool by Trump to exert control over the Fed. Hassett stated that he would welcome investigators looking at his emails if he were in Powell’s place, likening the probe to routine government oversight. This stance drew swift criticism from economists and former officials, who argued that it was inappropriate for a prospective Fed Chair to endorse such an investigation into the central bank’s leader.

Former Obama adviser Jason Furman, who had previously backed Hassett’s 2017 confirmation, was especially blunt, saying it was “sad but unsurprising” that Hassett accepted the probe as legitimate. The backlash underscored the sensitivity around the Fed’s independence—a principle that many in Washington, on Wall Street, and beyond see as critical to the nation’s economic stability.

The controversy only deepened when Powell revealed he had been served with a subpoena by the Department of Justice, related to alleged construction cost overruns at the Fed’s headquarters. According to The Economic Times, Powell argued that the criminal probe was being used as a pretext to undermine the central bank’s autonomy. The bipartisan response was swift and sharp. Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, announced he would “oppose the confirmation of any nominee for the Fed—including the upcoming Fed chair vacancy—until this legal matter is fully resolved.” Senator Lisa Murkowski of Alaska joined Tillis in vowing to block any nominee, effectively freezing the process until the Powell investigation concludes.

Amid this backdrop, Kevin Warsh’s candidacy has taken on new appeal, especially among those looking for a figure who is both familiar with the Fed and, at least for now, removed from the current White House fray. Warsh, who served on the Federal Reserve Board from 2006 to 2011, was a runner-up to Powell during Trump’s previous vetting process. He is seen as a Trump ally, but crucially, he is not currently serving in the administration—allowing him to sidestep the controversies dogging Hassett. Warsh has also refrained from commenting publicly on the Powell investigation, a silence that has arguably worked in his favor. Trump, according to The Economic Times, was impressed by Warsh during a recent interview, admiring his intelligence and presence.

The prospect of Warsh at the helm has sparked debate among economists and political observers. Paul Krugman, writing in a piece reposted on January 16, 2026, described Warsh as “a political operator favoring policies that help Republicans and opposing those that help Democrats.” Krugman recalled Warsh’s advocacy for fiscal austerity during the aftermath of the 2008 financial crisis, criticizing him for prioritizing the Fed’s “institutional credibility” over taking action to aid a struggling economy. “The point here is that Warsh’s argument basically rests on assertions not about what markets are saying now, but about presumed market reactions to policy,” Krugman wrote, questioning Warsh’s approach to both fiscal and monetary policy.

Yet, in the current climate, Warsh’s distance from the White House and his avoidance of the Powell controversy may be exactly what some senators and analysts are seeking. As Senator Tillis noted, choosing a candidate like Christopher Waller—who, despite being appointed by Trump in 2020, has no close personal ties to the president—could also satisfy calls for Fed independence. Waller’s candidacy, while trailing in the betting markets, remains a viable fallback, especially if concerns about political interference intensify.

Adding to the urgency, Treasury Secretary Scott Bessent has suggested that Trump’s pick for the next Fed Chair could be announced soon, perhaps as early as the upcoming World Economic Forum in Davos, Switzerland. With the president scheduled to deliver a high-stakes speech there, the world’s eyes will be on who emerges as the nominee to steer U.S. monetary policy at a time of legal uncertainty and political upheaval.

The next few weeks promise to be pivotal in shaping the future of the Federal Reserve—and, by extension, the broader U.S. economy. Whether Trump opts for Warsh, Waller, or another dark horse, the decision will reverberate through markets, policy circles, and households across the country. The only certainty, it seems, is that the race for the Fed’s top job remains as unpredictable as ever.