Trump Faces a Fed Chair Conundrum: Swift Rate Reductions or Maintaining Trust?

Trump’s Promise to Appoint New Fed Chair by Christmas Met With Doubt From Traders

President Donald Trump’s commitment to replace Federal Reserve Chair Jerome Powell before Christmas is being met with skepticism in prediction markets, where traders are assigning a 44% probability that the announcement will be postponed until 2026. Trump, who has often criticized Powell for not cutting rates sooner, has reportedly narrowed his choices to five contenders—including Treasury Secretary Scott Bessent and former Fed Governor Kevin Hassett—but has not yet made a final selection

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The five remaining candidates—Hassett, current Fed Governor Christopher Waller, Vice Chair for Supervision Michelle Bowman, former Fed Governor Kevin Warsh, and BlackRock executive Rick Rieder—are all seen as favoring a more dovish approach, supporting quicker rate cuts. Hassett, who is both a Trump ally and former National Economic Council director, leads the betting markets with a 32% chance, followed by Waller at 17% and Rieder at 15%

. Trump has reportedly voiced his annoyance with the process, saying, "People are holding me back" from ousting Powell, whose term ends in May 2026 .

Prediction platforms such as Kalshi are reflecting heightened uncertainty. On Polymarket, traders currently estimate a 27.6% likelihood that Hassett will be chosen if an announcement is made, with Waller and Rieder trailing at 9.7% and 8.3%, respectively

. This skepticism stands in contrast to Trump’s public confidence; he recently stated, "I'd love to get the guy currently in there out right now," while also commending Bessent’s performance and suggesting Bessent might take the job if he weren’t "too happy at Treasury" .

The direction of Fed policy remains a central concern for investors. All five candidates have indicated support for substantial rate cuts, marking a significant shift from Powell’s more cautious stance. Hassett, for example, described the Fed’s September 25-basis-point cut as "a good first step" toward "much lower rates," while Rieder has argued that current high rates "disproportionately burden lower-income earners"

. Waller and Bowman, both serving on the Fed, have already advocated for easing at recent meetings, with Waller emphasizing that "tariffs are one-off increases in the price level and do not cause inflation beyond a temporary spike" .

The administration’s schedule appears to be in flux. Treasury Secretary Bessent told Fox News that Trump plans to meet with the final three contenders after Thanksgiving, aiming to make a decision "before Christmas"

. Still, the 44% chance of a delay points to possible internal debates or outside influences that could slow the process.

The next Fed chair will have to carefully balance Trump’s push for lower rates with maintaining the central bank’s credibility in the eyes of investors.

, "The next chair must appeal to Trump's desire for aggressive easing without undermining investor confidence in the Fed's independence." For now, the market’s doubts highlight the uncertainty over whether Trump can deliver on his promise, even as he continues to assert his influence over economic policy.