Tensions surrounding Federal Reserve Chairman Jerome Powell are escalating. Donald Trump is increasingly hinting that he may be looking for a new leader of the U.S. central bank – and betting markets already have their favorites.
What once seemed like mere political speculation is now front-page news in financial media. Powell faces growing criticism – whether for the allegedly overpriced renovation of the Fed’s headquarters or for his reluctance to cut interest rates sooner. Some Fed governors and White House advisors are now openly calling for change.
There hasn’t been this much uncertainty around the Fed’s leadership since the 2008 financial crisis. If Trump were to remove Powell before his term ends in 2026, it would violate long-standing norms of central bank independence – and the consequences for markets could be severe.
So who could replace Powell? Betting platforms like Polymarket suggest several candidates are already gaining traction.
🔹 Kevin Warsh (odds: 24%) – A Veteran’s Return?
Former Fed Governor from 2006 to 2011, Warsh currently leads the betting. He nearly became Fed Chair in 2017, but Trump ultimately chose Powell. Now, with Trump calling for lower rates, Warsh is back in the spotlight.
He’s made several media appearances recently, arguing that rate cuts are overdue and even claiming that tariffs are “not inflationary,” echoing Trump’s stance.
Economist Neil Dutta has called him “one of the worst possible choices,” while Warsh himself told CNBC, “We don’t need continuity when the Fed has lost credibility. We need a regime change.”
🔹 Scott Bessent (odds: 20%) – Trump’s Loyal Insider
Chief economic advisor to Trump, Bessent is widely seen as a loyalist who would likely align closely with Trump’s monetary goals. While Trump recently said he prefers Bessent to remain in his current role, his name continues to be floated.
Bessent has shown he’s unbothered by market volatility and has previously sided with Trump during major stock sell-offs. Nobel laureate Paul Krugman said anyone Trump appoints would “cheerlead his worst ideas no matter how bad they are.”
Still, Bessent told Bloomberg on Tuesday that “the formal process has begun,” adding, “There are plenty of great candidates. We’ll see how fast this moves.”
🔹 Kevin Hassett (odds: 12%) – The Hawkish Challenger
Director of the National Economic Council, Hassett is one of the loudest advocates for dramatic rate cuts – up to three percentage points. He’s also criticized the Fed’s renovation budget and voiced support for replacing Powell.
Trump has praised him in the past as “fantastic.” Yet even Hassett acknowledges that the Fed should remain independent, despite advocating for a leadership change.
Still, Michael Brown from Pepperstone Group warned that Hassett and other political picks “may struggle to gain Senate confirmation.”
🔹 Christopher Waller (odds: 12%) – The Market’s Quiet Favorite
Current Fed Governor Christopher Waller is more of a dark horse, but his odds are rising. In July, he said the slowdown in private-sector job growth means the Fed shouldn’t wait to cut rates – a message that resonated with traders.
Waller’s academic and less politicized approach makes him more appealing to markets wary of heavy White House influence.
As Warren Pies from 3Fourteen Research put it: “Waller offers an intellectually consistent, reasonable stance – unlike the sycophantic alternatives.”
Waller also recently stated that once data revisions are taken into account, wage growth is “approaching stagnation,” and with inflation near target, “we shouldn’t wait for the labor market to deteriorate before cutting rates.”
🎲 Betting Markets Watch Every Move
While trading platforms closely monitor the odds of each candidate, the financial world is bracing to see whether Trump will actually remove Powell – and if so, when. According to Polymarket, 32% of bettors believe the announcement will come on December 31.
One thing is clear: Politics is clashing with the principle of central bank independence, and markets are watching every name and every statement for signs of where interest rates, the dollar, and inflation may head next.
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