Market thinks BlackRock’s Rieder will next chair the Fed. What’s at stake

After a lengthy five-month process, the race to find the next Federal Reserve chair is coming to a close, with one candidate emerging as the favorite in prediction markets. Rick Rieder, the fixed income chief at BlackRock, is currently leading the pack with a 48% chance of being chosen to replace Jerome Powell at the helm of the central bank. This puts him well ahead of former Governor Kevin Warsh, who is trailing with a 31% chance.

However, the sentiment in the prediction markets has been volatile, with Warsh holding a significant advantage just a week ago. The shift in favor of Rieder seems to have been influenced by comments made by President Trump during a CNBC interview at the World Economic Forum. Trump praised Rieder as “very impressive,” and a report from Bloomberg News, citing unnamed sources, indicated that White House officials had a favorable view of Rieder.

Despite the current market sentiment, some on Wall Street remain skeptical and believe that the race for the Fed chair is still competitive and far from being decided. Analysts point out that both Kevin Warsh and Kevin Hassett, the director of the National Economic Council, are still strong contenders for the position.

Tobin Marcus, head of U.S. policy and politics at Wolfe Research, expressed doubts about Rieder’s candidacy, noting that Trump has previously emphasized loyalty as a key criterion for the position. Marcus believes that both Kevins are still viable candidates, and he thinks that the betting markets may be misinterpreting Trump’s comments about Hassett.

Former Fed Vice Chair Roger Ferguson echoed similar sentiments, stating that he believes the decision will ultimately come down to one of the Kevins. He described Rieder as a qualified candidate and a favorite on Wall Street but expressed skepticism about his chances of being chosen.

There is also the possibility that Trump could surprise everyone by selecting a candidate who is not among the current finalists. Trump has previously mentioned Treasury Secretary Scott Bessent as a potential choice, even though Bessent has indicated that he is not interested in the position.

If Trump does choose Rieder, he would be getting a candidate who aligns with his views on interest rates and the economy. Rieder has advocated for lower interest rates and using the Fed’s balance sheet to support the economy. However, Rieder’s support for Fed independence and his desire for a key interest rate of around 3% may not sit well with Trump, who has been vocal about wanting a chair who will follow his directives.

Despite the current speculation and predictions, the final decision on the next Federal Reserve chair remains in the hands of President Trump. Only time will tell who will be chosen to lead the central bank in the coming years. President Trump’s decision to potentially nominate BlackRock’s fixed income CIO, Rick Rieder, as the next Federal Reserve chair has sparked a mix of reactions. While some may question Rieder’s lack of policy experience, others believe that his unique perspective rooted in detailed corporate data analysis could bring a fresh approach to the role.

Rieder, who has not previously held a policy position, is known for his expertise in conducting thorough bottom-up analysis of corporate data. This approach stands in contrast to the traditional economic theories and models often relied upon by central bankers. Krishna Guha, head of global policy and central bank strategy at Evercore ISI, believes that Rieder’s appointment could be well-received by the market, as he would be seen as someone who understands the intricacies of the financial world.

Despite potential concerns about Rieder’s lack of policy background, it is clear that Trump values individuals who prioritize what they believe is right. This sentiment was echoed by a White House official who stated, “They’ve got to do what they think is right.” This suggests that Trump is looking for someone who will bring a fresh perspective to the role, even if it means deviating from the norm.

If Rieder is indeed chosen as the next Fed chair, it is likely that markets will react positively to his appointment. His reputation as a skilled analyst and his understanding of corporate data could provide a new lens through which to approach monetary policy. While there may be uncertainty surrounding his appointment, Rieder’s selection would signal a departure from the status quo and a willingness to embrace different viewpoints.

In conclusion, the potential nomination of Rick Rieder as the next Federal Reserve chair highlights the importance of considering diverse perspectives in shaping economic policy. While Rieder’s lack of policy experience may raise some eyebrows, his expertise in corporate data analysis could offer a fresh approach to the role. Ultimately, the decision rests with President Trump, who values individuals who prioritize their convictions and are unafraid to challenge conventional wisdom.