Fed Chair Race Tightens On Kalshi: Warsh Catching Up to Hassett

President Donald Trump has narrowed his search for the next Federal Reserve Chair to Kevin Warsh and Kevin Hassett. This has created major movement in prediction markets and renewed debate about the future of U.S. monetary policy.

Trump praised both candidates in an interview with The Wall Street Journal. He called them “the two Kevins.” His comments immediately affected betting platforms like Kalshi. The race has become tight. Investors, analysts, and political observers are watching closely as the decision approaches.

Warsh’s Rise and Market Reaction

Trump indicated that Warsh has risen to the top of his list. He emphasized their alignment with his push for lower interest rates. The comments were made on December 12. They immediately roiled betting platforms like Kalshi.

Warsh’s probability of nomination surged from around 15% to as high as 40% within hours. As of today, Kalshi shows Hassett holding a slight edge at 51%. Warsh is close behind at 42%. Federal Reserve Governor Christopher Waller trails at 7%.

This marks a significant reversal from earlier in the week. Hassett dominated with odds near 80%. This reflected market confidence in his close ties to Trump. Trump’s remarks came amid his ongoing criticism of current Fed Chair Jerome Powell. Powell’s term expires in May 2026.

The president reiterated his desire for rates to drop to “1% or lower.” He stated that the next chair should consult him on decisions. “I’m a smart voice and should be listened to,” Trump told the Journal.

He described an interview with Warsh on December 10. The former Fed governor expressed support for rate cuts. This aligns with Trump’s economic agenda.

Profiles of the Two Kevins

Warsh, 55, served as a Fed governor from 2006 to 2011. He played a key role in the 2008 financial crisis response under Chair Ben Bernanke. He is known for his hawkish stance on inflation. He has criticized the Fed’s recent “mission creep.” He has advocated focusing on price stability.

Analysts note his views have softened in the current environment. He could potentially support gradual rate reductions. Warsh’s odds received an additional boost from JPMorgan Chase CEO Jamie Dimon. Dimon signaled support in comments reported by the Financial Times.

He praised Warsh’s ability to strike a balance between independence and market expectations. Dimon suggested Hassett might favor quicker cuts in the short term. He said Warsh could provide longer-term stability.

Hassett is the former chair of the Council of Economic Advisers under Trump, serving from 2017 to 2019. He is the current White House National Economic Council director.

He is seen as a dovish insider. The 62-year-old economist has called for aggressive rate cuts. He has called for a half-point reduction this week to spur growth.

Critics worry his proximity to Trump could compromise the Fed’s autonomy. Despite the dip, Hassett remains the betting favorite. Markets are pricing in his alignment with Trump’s low-rate preferences.

Broader Implications and Market Impact

The race has broader implications for financial markets and emerging sectors, such as cryptocurrencies. A Hassett-led Fed might accelerate rate cuts, boosting risk assets such as Bitcoin and Ethereum as lower borrowing costs encourage investment.

Crypto traders have ramped up bets on Warsh following Trump’s endorsement. They anticipate his cautious approach could still support moderate easing, though his historical hawkishness might introduce volatility if inflation concerns resurface.

Bloomberg reports suggest Trump could announce his pick by year’s end or early 2026. Other names like Waller and Michelle Bowman have faded. For now, the “two Kevins” dominate the narrative.