Kevin Warsh favourite for Fed chair as Trump prepares to name his pick

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Former Federal Reserve governor Kevin Warsh has shot into pole position to replace Jay Powell as the central bank’s chair after Donald Trump said he would choose a candidate who could have “been there a few years ago”.

Warsh’s odds on prediction market Polymarket surged to 86 per cent on Thursday evening after the president said he would announce his decision on Friday morning. Rick Rieder, the BlackRock executive who was widely seen as the Warsh’s chief rival to secure Trump’s nomination to run the world’s most powerful central bank, fell to just 8 per cent.

Trump’s decision would end one of the most contentious races for the top job in recent memory. It comes at a time when he has relentlessly criticised Powell for not bowing to his demands to cut interest rates, with the president referring to him earlier on Thursday as a “moron” who was hurting the US’s economic prospects.

Trump said at a Kennedy Center event in Washington on Thursday evening to mark the premiere of Melaniathe documentary about First Lady Melania Trump, that he would announce his candidate to head the US central bank “tomorrow morning”.

“A lot of people think that this is somebody that could have been there a few years ago,” the president said. “It’s going to be somebody that is very respected, somebody that’s known to everybody in the financial world.”

Wars interviewed for the job in 2017 when it eventually went to Powell. Fed governor Christopher Waller and White House economist Kevin Hassett are also finalists for the position.

Trump, who has on several occasions claimed an announcement was imminent, earlier on Thursday said he expected to name his pick next week. Betting markets have favoured different candidates in recent weeks, reflecting the president’s apparent shifts between possible nominees.

Powell, who has repeatedly faced Trump’s ire over his reluctance to slash interest ratesis set to step down as chair in May.

The Fed held borrowing costs at a 3.5 per cent to 3.75 per cent range on Wednesday, following three quarter-point cuts last year.

Trump posted on Truth Social earlier on Thursday that Powell had “absolutely no reason” to keep interest rates high.

“We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat,” the president said. “He is costing America Hundreds of Billions of Dollar a year in totally unnecessary and uncalled for INTEREST EXPENSE.”

Trump, who wants borrowing costs to fall to about 1 per cent, has said any candidate who gets the job must be willing to slash rates.

Trump’s repeated attacks on the Fed have raised alarm in financial markets about the independence of the central bank.

The odds for Hassett, a close ally of the president, collapsed after pushback from senators over the White House launching a criminal investigation of Powell’s testimony. The Fed has defended his testimony.

Powell said the Department of Justice’s decision to serve him with grand jury subpoenas over a renovation of the Fed’s headquarters was “a pretext” aimed at pressing the central bank into making more rate cuts.

Some Republican senators, led by North Carolina’s Thom Tillis, threatened to block Trump’s pick — who needs to be confirmed by a Senate majority — unless the probe was dropped.