The race for the next Federal Reserve Chair underwent a significant transformation following public comments from former President Donald Trump. On January 16, 2026, Trump indicated a preference to keep his economic adviser, Kevin Hassett, in his current White House role, casting doubt on Hassett's previously speculated candidacy to succeed Jerome Powell.
Trump stated, "I actually want to keep you where you are if you want to know the truth. Kevin Hassett is so good." He expressed concern that moving Hassett to the Fed would mean losing a trusted advisor, as "these Fed guys don't talk much." This remark caused prediction markets on platforms like Kalshi and Polymarket to dramatically lower Hassett's odds of becoming the next Fed chair, dropping from around 35% to 15%.
The shift in probabilities has elevated former Federal Reserve Governor Kevin Warsh to the status of leading contender. Warsh, who served during the global financial crisis, is viewed by markets and Washington insiders as a candidate with central-bank credibility and a preference for clearer separation between monetary policy and politics.
The market reaction was immediate and broad. Following the news, the values of gold, silver, copper, and Bitcoin declined, while the 10-year Treasury yield hit its highest level since April. These movements reflect investor reassessments of future interest rate and monetary policy trajectories based on the evolving leadership picture.
The event occurs against a backdrop of intense scrutiny over central bank independence. Bank of England Governor Andrew Bailey recently urged major institutions to defend global cooperation against populism. Furthermore, Fed Chair Powell is currently facing a Department of Justice probe related to congressional testimony, which has intensified debates about political interference. Economists at JPMorgan Chase, including CEO Jamie Dimon, warn that such interference risks increasing inflation and interest rates.
From a cryptocurrency perspective, a potential Warsh chairmanship may signal a tonal shift rather than a radical policy change. While Powell has maintained a cautious, regulation-first stance on digital assets, Warsh has acknowledged Bitcoin's potential as a store of value, comparing it to gold. However, he remains skeptical of private cryptocurrencies functioning as everyday money, suggesting policy outcomes would likely remain conservative.
Powell's term is set to end on May 15, 2026, with markets largely anticipating one final rate cut under his leadership before the transition. The next chair will define monetary policy direction for the latter half of the decade.
