Trump Keeps Hassett, Picks Warsh

U.S. President Donald Trump has defended his decision not to nominate Kevin Hassett to lead the Federal Reserve, saying he chose to keep his top economic adviser in place while ultimately selecting Kevin Warsh to succeed Jerome Powell.

The comments come as prediction markets and investors closely track the future path of U.S. monetary policy, with traders on Polymarket pricing in a 76% probability that the Fed will hold interest rates steady through April.

Trump Explains Decision To Keep Hassett At White House

In a post on Truth Social, Trump said he chose not to move Hassett from his current role as director of the National Economic Council, despite speculation that he was a leading candidate to replace Powell.

Trump described Hassett as “indescribably good,” emphasizing that he did not want to disrupt the administration’s economic team during a critical policy period. 

Hassett has served as one of the administration’s key economic strategists, coordinating policy across agencies and helping shape fiscal and trade initiatives.

The president also revealed that he interviewed several candidates for the Fed’s top job, including Fed Governor Christopher Waller and Rick Rieder, a senior executive at BlackRock. Trump said all candidates had strong credentials and long-term potential within his broader economic vision.

Warsh Selected To Lead Central Bank After Months Of Speculation

On Friday, Trump formally nominated Warsh to lead the central bank, ending months of speculation around the succession process. Warsh previously served as a Fed governor between 2006 and 2011 and was heavily involved in policymaking during the global financial crisis.

Warsh had been widely viewed as a frontrunner for the position and was previously considered for the role during Trump’s first term, when Powell was ultimately selected instead.

Warsh’s background spans both public and private sectors. He worked as an investment banker at Morgan Stanley before entering government, later serving as an economic adviser in the administration of former President George W. Bush. 

Fed Policy Outlook And Political Pressure Remain In Focus

Warsh’s nomination comes amid a strained relationship between Trump and Powell, who has faced criticism from the administration over interest rate decisions and internal Fed spending issues.

Despite Warsh’s reputation earlier in his career as a monetary policy hawk, some investors view him as more flexible in recent years, potentially aligning more closely with the administration’s preference for lower borrowing costs.

However, structural limits remain. The Fed’s rate decisions are determined by the Federal Open Market Committee, meaning the chair acts as one voice among multiple policymakers.

Prediction Markets Signal Expectation Of Rate Stability

Alongside the leadership transition, attention has shifted to the near-term path of U.S. interest rates. 

According to prediction market data, Polymarket traders currently assign a 76% probability that the Fed will not change interest rates through April, reflecting expectations that policymakers may adopt a wait-and-see approach as economic data evolves.

Contract asking what the Fed’s decisions will be through April (Source: Polymarket)

The next highest odds of 16% are for pauses for the next two decisions and then one cut in April.

Earlier this week, the Fed decided to keep interest rates steady.

Regarding the next decision in March, the CME Fedwatch tool aligns with what bettors are saying on Polymarket, and see over 88% odds that the central bank will keep rates steady between 3.50% and 3.75%.