As regime change looms at the Fed, one candidate emerges as front-runner

President Donald Trump knows who he’s going to select as the next Federal Reserve chair but isn’t saying yet. Prediction markets have their minds made up, but the front-runner also is playing it coy.

While that part of the mystery appears ready to clear up in the coming weeks, what’s far less certain is the type of environment the new central bank leader will face at a potential crossroads for the U.S. economy.

National Economic Council Director Kevin Hassett has been dubbed the clear favorite, buoyed by a Bloomberg News report last week that handicapped the five-person race to succeed current Chair Jerome Powell, whose term runs out in May.

Asked Sunday about the situation, Trump told reporters aboard Air Force One, “I know who I am going to pick, yeah. We’ll be announcing it.” Beyond that, he smirked when asked about Hassett, adding “I’m not telling you, we’ll be announcing it.”

The candidate himself made the rounds on the weekend talk circuit, also dodging questions about his prospects. Hassett is part of a field that also includes current Governors Christopher Waller and Michelle Bowman, former Governor Kevin Warsh and BlackRock fixed income chief Rick Rieder.

“I’m really honored to be amongst a group of really great candidates,” Hassett said Sunday on CBS’ “Face the Nation.” He did note that markets had a positive reaction to the report of him emerging as the favorite, saying that Americans “could expect President Trump to pick somebody who’s going to help them, you know, have cheaper car loans and easier access to mortgages at lower rates.”

Shortly before that, on Fox News, Hassett merely stated, “If he picks me, I’d be happy to serve.”

Predictions markets have been off to the races in recent days, placing firm odds on Hassett getting the job. As of Monday afternoon, Kalshi traders assigned a 79% probability, while PredictIt put the chance at 75% and Polymarket had it at just 63%, with “no announcement by Christmas” having the second-highest probability of 22%, easily topping any of the other four finalists.

Whomever the actual pick is will take over a Fed that is currently torn between officials who think additional interest rate cuts are warranted to head off potential trouble in the labor market against those who worry that inflation continues to pose a threat that would be exacerbated by further easing in monetary policy.

For the next rate decision on Dec. 10, futures market traders are assigning an 87.6% chance of a cut in trading that has been highly volatile in recent weeks.

Trump and other administration officials have been vocal about their preference for much lower rates, and the president has stated that is a litmus test for the next chair. In 2026, members of the rotating cast of regional presidents who get a vote on the…