Prediction Markets Signal Tightening Fed Chair Race as Rate Outlook Remains Unchanged

Prediction markets are increasingly signaling that the race to become the next U.S. Federal Reserve Chair is growing more competitive. Recent data from Polymarket shows that the probability of Kevin Hassett securing the role has fallen below 50%, reflecting rising skepticism among traders and analysts. While Hassett was once viewed as the clear frontrunner, shifting odds now suggest stronger competition and uncertainty around President Donald Trump’s final nomination decision. At the same time, investors are closely watching Federal Reserve policy, with most expecting interest rates to remain unchanged at the next meeting despite intensifying political debate.

The Polymarket chart tracking Fed chair nomination odds highlights a narrowing field that includes Kevin Warsh, Christopher Waller, and Rick Rieder. Hassett’s odds surged earlier in December after public comments indicating his willingness to accept the position, but momentum has since cooled as other candidates gained attention. Warsh has recently attracted increased interest from traders, while Waller continues to be seen as a steady and credible option. Although Rieder holds the smallest probability, his inclusion underscores the broadening nature of the race and the market’s uncertainty.

Speculation around the Fed chair choice is closely tied to expectations for future monetary policy. Influential voices such as Anthony Scaramucci and Mike Novogratz have suggested that President Trump may seek a more dovish Fed chair aligned with his preference for lower interest rates. According to their remarks, Trump could favor candidates open to aggressive rate cuts, potentially targeting rates near 1% to support economic growth. Fed official Stephen Miran has echoed similar views, arguing that lower rates could help the U.S. avoid a recession, further fueling market expectations of a more accommodative policy stance.

Despite political pressure, prediction markets currently show only a 14% chance of a rate cut at the upcoming January meeting. Traders overwhelmingly expect the Federal Reserve to hold rates steady, with minimal odds assigned to either a 25-basis-point move or a larger adjustment. While near-term policy appears stable, the ongoing debate over the Fed chair nomination is contributing to expectations of more significant policy shifts later in the year, keeping investors focused on inflation risks, rate cuts, and broader economic implications.