Kevin Warsh Takes Lead As Trump Signals Fed Chair Pick

The contest to become the next chair of the Federal Reserve has taken a dramatic turn, with former Federal Reserve Governor Kevin Warsh emerging as the clear front-runner after President Donald Trump strongly hinted he wants to keep National Economic Council Director Kevin Hassett in his current job. The shakeup unfolded over the course of Friday, January 16, 2026, as both prediction markets and political insiders recalibrated their expectations in real time.

During his appearance at the White House, President Trump addressed Hassett directly, saying, "I see Kevin's in the audience, and I just want to thank you. You were fantastic on television today." The president added, "I actually want to keep you where you are, if you want to know the truth. Kevin Hassett is so good." According to CNBC, this public endorsement of Hassett’s performance as economic adviser, rather than as a candidate for the top Fed job, sent ripples through the financial and political worlds.

Trump’s remarks were not lost on the markets. As Bloomberg reported, the odds of Warsh clinching the coveted nomination soared to 60% on Polymarket by Friday afternoon, while Hassett’s chances plunged to just 17%. Kalshi, another major prediction market, mirrored these numbers, with Warsh at 59% and Hassett at 18%. For comparison, current Fed Governor Christopher Waller was considered a long shot at 14-15%, and BlackRock executive Rick Rieder trailed even further at 6%.

The sudden shift was all the more dramatic given how tight the race had been just days earlier. As CNBC noted, Warsh and Hassett were in a near dead heat as recently as Wednesday, January 14. But with Trump’s comments, the balance tipped decisively. Krishna Guha, head of global policy and central bank strategy at Evercore ISI, summed up the mood: "It is not certain this is a definitive signal — the President has given various signals at various times and appears to enjoy the drama of this Celebrity Apprentice season — but it does look as if the former Fed governor is for the first time the clear front-runner."

President Trump’s signals were, as always, layered with a bit of ambiguity and showmanship. Addressing White House Chief of Staff Susie Wiles, he said, “We don’t want to lose him [Hassett], Susie, but we’ll see how it all works out.” According to The Wall Street Journal, Trump has not set a specific date to announce his pick, but he has indicated that he will name a successor to Jerome Powell this month. Powell’s term as chair expires in May 2026, though he could remain on the board through 2028 if he chooses.

Hassett has been a leading contender for the role, competing closely with Warsh. But Trump’s Friday remarks, combined with the market’s reaction, have made it clear that Warsh is now the odds-on favorite. Forecasting market Polymarket data showed Hassett’s probability of nomination dropping to 15%, equal to Fed Governor Waller, while Warsh’s shot at the chair rose to over 60%—a commanding lead. Other finalists still technically in the running include Fed Governors Michelle Bowman and Christopher Waller, as well as BlackRock’s Rick Rieder, but their odds remain low.

Before Trump’s pivotal remarks, Hassett himself seemed to acknowledge the changing winds. According to BlockBeats News, Hassett said, “Warsh and Rieder would also be great Federal Reserve Chairs.” This gracious nod to his competitors suggests Hassett may already have had some inkling of Trump’s final decision, or at least recognized the writing on the wall.

Warsh’s policy stance is of particular interest to both Wall Street and Washington. Seen as more hawkish than Hassett, Warsh is nonetheless expected to support rate cuts while also advancing balance sheet reduction, known as quantitative tightening (QT). Earlier this year, Warsh made headlines by declaring, “inflation is a choice,” arguing that inflation is not primarily driven by supply chain issues or geopolitical events, but by the Federal Reserve’s own policy decisions. He’s also expressed optimism about the U.S. economic outlook, citing artificial intelligence and deregulation as potential drivers of a productivity boom reminiscent of the 1980s.

The current Fed chair, Jerome Powell, has found himself at the center of controversy. On Sunday prior to Trump’s remarks, Powell publicly revealed that he is under criminal investigation for allegedly lying during congressional testimony last summer. This revelation came after years of Trump criticizing Powell for not lowering interest rates quickly enough. While Powell’s term as chair ends in May, he could choose to stay on as a Fed governor through 2028, but he has so far declined to comment on his intentions.

Trump has also made it clear that Treasury Secretary Scott Bessent is not in consideration for the Fed chair role, stating that Bessent “wants to stay where he is.” Both Rieder and Waller have been interviewed for the job, according to Bloomberg. There’s precedent for flexibility in these appointments: when Fed Governor Adriana Kugler unexpectedly resigned last summer, Trump tapped Stephen Miran, then a top White House economic adviser, to fill the vacancy. Miran, interestingly, refused to fully resign from his White House role, instead opting for an unpaid leave of absence.

Prediction markets have become a popular way to gauge the likelihood of political events, and this Fed chair race has been no exception. According to Dow Jones, Polymarket users put Hassett’s chance at 17%, down from a high of 75% in December 2025, while Warsh’s odds jumped from about 40% to nearly 60% in the wake of Trump’s Friday comments. On Kalshi, Hassett’s chances fell to as low as 13% Friday morning, a drop of about 20 percentage points in a matter of hours.

For now, the financial world and political observers are left waiting for Trump’s final decision. The president’s penchant for public drama and last-minute twists means nothing is certain until the official announcement is made. But as of now, the momentum is unmistakably with Kevin Warsh, whose hawkish-yet-pragmatic reputation and optimistic economic vision have positioned him as the likely next leader of the world’s most influential central bank.

With the stakes so high and the market’s attention so focused, all eyes will remain on the White House until the president’s choice is finally revealed.