Warsh Surges in Fed Chair Race After Trump Signals Preference for Hassett

Mark Warsh, former White House economic adviser and senior partner at private equity firm Warsh Capital, has emerged as the leading contender for Federal Reserve chair following remarks from President-elect Donald Trump. In a brief interview on January 15, Trump stated he would prefer to keep Kevin Hassett in his current role as top economic advisor, a comment interpreted as a signal of continuity in economic policy and a potential endorsement of Hassett’s institutional allies. This shift in sentiment is reflected in current prediction markets, where Warsh’s implied probability of being nominated as Fed chair rose to 68% by January 16, up from 41% on January 9. Meanwhile, Hassett’s own odds of a Fed appointment have climbed to 34%, though he remains officially outside the formal selection process. Other candidates, including former Fed Governor Daniel Tarullo and University of Chicago economist Austan Goolsbee, have seen their probabilities fall to 12% and 9%, respectively. The movement underscores the influence of political signaling on financial markets and institutional appointments. The CME Group’s FedWatch tool indicates that markets now price in a 73% chance of a rate cut by July 2026—up from 52% earlier this month—reflecting expectations of a dovish Fed under Warsh’s potential leadership. The S&P 500 rose 0.8% on January 16, with financial and tech stocks leading gains, while Treasury yields declined across the curve. Warsh, a former aide to President George W. Bush and a key architect of the 2008 financial rescue plan, has built a reputation for fiscal discipline and regulatory reform. His rise comes amid growing scrutiny over the Fed’s independence and the politicization of monetary appointments, especially in a post-Trump era where economic policy preferences are expected to be more overtly aligned with administration priorities.