The leader of the American central bank, Jerome Powell, will have his term end in May this year. But users on prediction markets are already betting on who USA’s President Donald Trump will choose as his successor.
Previously, Kevin Hassett was in the running, but now the momentum has shifted towards BlackRock's Chief Investment Officer Rick Rieder.
Markets read Trump's signals from Davos
Rieder is currently performing strongly on prediction platforms. Markets on both Polymarket and Kalshi give him a 45% chance of getting the nomination, placing him above other candidates like the central bank's Christopher Waller and former Fed employee Kevin Warsh.
At first glance, it may seem like an uninteresting bet, as the Trump administration has often early on floated possible central bank candidates. But in a recent interview with CNBC at the World Economic Forum in Davos, Trump described the BlackRock director as "very impressive."
"I would say we are down to three, but we are down to two. And I can probably say we are down to one, in my mind," Trump said.
The speculation is that Rieder is the favorite.
According to Bloomberg, Rieder stands out from the other candidates for several reasons. Unlike Waller and Warsh, he has never worked at the central bank and is therefore considered less tied to the institution. Additionally, Rieder has signaled that he is willing to implement changes at the Fed.
But it would not be the first time Trump says he has settled on a candidate.
Why Hassett lost popularity
A month ago, Hassett was the most talked-about candidate to succeed Powell.
As director of the USA’s National Economic Council (NEC), he consistently expressed subdued views on interest rates, which aligned well with Trump’s economic strategy.
Due to this alignment, Trump initially strongly supported Hassett as a potential central bank chief. But less than two weeks ago, he changed his mind and instead signaled a preference for allowing Hassett to continue leading the NEC.
Polymarket shows that Hassett's chance of being chosen has since fallen to 8%.
Regardless of who takes over after Powell, Trump has clearly stated that he wants to lower interest rates. If that happens, crypto markets may feel the change first.
What the central bank's interest rate cuts mean for crypto
Lower interest rates typically mean more liquidity. For consumers, it means cheaper loans and often greater risk appetite.
If the American central bank, under new leadership, continues to lower interest rates, Bitcoin and Ethereum may experience renewed increases.
The conditions for interest rate cuts are crucial.
In recent months, the Trump administration has repeatedly challenged the independence of the American central bank, triggering negative reactions in the bond market and creating more volatility in the crypto market.
If Trump continues to pressure the next central bank chief, the outlook for the crypto market may deteriorate.
