The candidate for the Federal Reserve Chair has changed: Hassett may withdraw, and Walsh has become the frontrunner

The White House economic advisor and director of the National Economic Council, Kevin Hassett, recently stated that Trump is more likely to want him to continue in his current position at the White House. This statement has been interpreted by the market as a sign that he is essentially withdrawing from the race for the next chairman of the Federal Reserve.

After Trump publicly released this signal, the prediction market quickly adjusted its expectations. Data from Kalshi and Polymarket shows that the probability of former Fed governor Kevin Walsh becoming the next chairman of the Federal Reserve has surged to about 60%, clearly leading; Hassett's chances have dropped to about 15%–16%, while current governor Christopher Waller stands at about 13%–14%. Previously, Walsh and Hassett were considered evenly matched.

Analysts point out that Walsh has become the "clear frontrunner" for the first time, but Trump has a history of changing his mind on personnel issues, leaving the final outcome uncertain. Other major candidates still include Waller and BlackRock executive Rick Rieder.

Meanwhile, the judicial investigation surrounding the Federal Reserve's headquarters renovation project adds uncertainty to the chairman selection process and has reignited market concerns about the Fed's independence. Treasury Secretary Mnuchin downplayed the related impact, stating that the market is generally stable and that the Senate is expected to accept Trump's final nominee.

Current Fed Chairman Powell's term will end on May 15. Trump has stated that he will announce his successor within this month but has not provided a specific timeline.