In a surprising turn of events, former Trump economic advisor Kevin Hassett has emerged as the frontrunner to be the next Federal Reserve Chair, according to the latest prediction market data. The Polymarket market on "Who will Trump nominate as Fed Chair?" currently shows Hassett with a 79.5% probability of being selected.
This market has been closely watched by investors and policy wonks alike, as the identity of the next Fed Chair will have significant implications for the future direction of monetary policy. The current Chair, Jerome Powell, is widely expected to be replaced when his term expires in early 2026.
Hassett was initially seen as a long-shot candidate, with the market previously favoring more conventional picks like Fed Governor Lael Brainard or former Fed Vice Chair Richard Clarida. However, Hassett's odds have steadily climbed in recent weeks, suggesting growing momentum behind his potential nomination.
Hassett, an economist by training, served as the Chair of the Council of Economic Advisers under President Trump from 2017 to 2019. During his tenure, he was known as a vocal advocate for the administration's tax cut policies and a defender of its trade wars. His views on monetary policy and skepticism of the Fed's interventionist approach may have appealed to Trump's base, potentially giving him an edge in the selection process.
If nominated and confirmed, Hassett would likely steer the Fed in a more conservative direction, prioritizing price stability over full employment. This could mean more aggressive interest rate hikes to combat inflation, potentially risking a deeper economic slowdown.
Such a shift would mark a significant departure from the Powell-era Fed, which has emphasized a balanced approach and sought to maintain maximum employment alongside its inflation mandate. Hassett's selection would signal a return to a more traditional Republican-leaning monetary policy framework, with potentially far-reaching consequences for financial markets and the broader economy.
As the 2026 transition at the Fed draws nearer, the Polymarket prediction market will continue to be a closely watched barometer of sentiment. Any further shifts in Hassett's odds or the emergence of alternative frontrunners could provide valuable insights into the Trump administration's thinking and the potential direction of future Fed policy.
Ultimately, the final decision will rest with the president, and there is still time for other candidates to gain traction. However, the current market dynamics suggest that Hassett's star is on the rise, potentially foreshadowing a dramatic shakeup at the helm of the world's most powerful central bank.