As President Trump intensifies his public feud with Fed Chair Jerome Powell, calling him a “numbskull” and hinting at replacing him, Kalshi customers are placing real money trades on his choice for the next Fed leader.
For most of Tuesday, Scott Bessent carried a slight lead at around 47 cents with an implied probability of 47%. Kevin Warsh was priced around 44 cents. On the morning of Wednesday’s FOMC press conference, the odds flipped drastically, with Federal Reserve Governor Christopher Waller chances jumping from 20% to nearly 80% in a matter of hours.
Current Fed Chair Powell is scheduled to announce this month’s fed rate decision at a 2:30 p.m. EST press conference after the committee announces the decision internally at 2 p.m.
June 22 Update: With more trading volume coming in, Warsh leads the odds at 36% with Waller and Bessent not far behind at 22% and 20%, respectively.
Next Fed Chair trading market emerges
Trump’s hostility toward Powell has been overt and personal. Last week, he labeled Powell a “numbskull” for resisting interest-rate cuts.
Despite expressing he won’t fire Powell, Trump has raised expectations of a replacement “very soon.”
On Kalshi, a contract titled “Who will Trump nominate as Fed Chair?” lets customers place trades on who Trump will formally nominate to replace Powell before January 20, 2029. The market has around $20,000 in trade volume so far.
If your pick is chosen, each correct contract returns $1; otherwise, it’s worth nothing. The possibility to turn policy bets into payoff is one reason Kalshi has emerged as a popular exchange for trading event contracts on just about anything you read about in the news.
Bessent, Warsh or Waller: Who will be Trump’s pick for next Fed chair?
The market reaction has been swift: Bessent surged after Bloomberg reported his consideration. As of Tuesday, Warsh remained close behind as a veteran former governor with appeal to both Wall Street and Trump. As of Wednesday morning, a seismic shift in odds suggests Christopher Waller, who was seen as a long shot candidate just hours earlier, may be Trump’s pick.
Waller is a current member of the Federal Reserve Board of Governors, a position he has held since December 2020 after being nominated by Donald Trump in his first presidential term. Waller’s term runs through January 2030. As a Trump appointee, Waller may be viewed as more likely to share or at least accommodate the administration’s economic priorities, such as growth and job creation, potentially through easier monetary policy. He has also publicly supported lower interest rates earlier this year, which aligns with Trump’s agenda. Waller’s strong academic background in monetary policy and Fed experience could make him a more palatable pick from a bipartisan perspective.
Bessent, a hedge fund veteran and Trump-aligned Treasury Secretary, is seen as a continuity candidate. “Given the amount of trust and confidence that the global financial community has in Scott Bessent, he’s an obvious candidate,” Tim Adams, president of the Institute of International Finance, told Bloomberg. Bessent is widely credited for implementing Trump’s economic priorities, even during turbulent trade negotiations.
Warsh, by contrast, boasts deep Federal Reserve experience, including serving during the financial crisis. But as a hawkish former governor, he’s drawn criticism from both Trump and policy analysts. Renaissance’s Neil Dutta warned that “he hasn’t been anywhere close to making decisions on matters of monetary policy in a long time.”
What prediction markets are saying
Kalshi prices reflect the market’s implied probability of nomination. Contracts on Bessent to be the nominee dropped from $0.47 to $0.06 overnight, now suggesting a 6% likelihood. Meanwhile, Warsh remains a possiblity, according to the Kalshi prediction market. His odds dropped from 44% to 26%, however.
Waller’s odds surged from 20% to 79% from Tuesday to Wednesday, but Yes contract prices on Waller are currently $0.66. That means every correct Yes contract on Waller would return a profit of $0.34.
With relatively low trading volume on the market so far, the odds and pricing could drastically shift as new information surfaces.
What could change the odds for next Fed chair
A Waller rise:
- Waller was Trump’s nominee for his current position in the Fed.
- He has at times expressed support for lower interest rates.
- He has a strong academic and monetary policy research background that could broaden his appeal across partisan lines.
Boost for Bessent:
- Bloomberg reports suggest insiders are rallying behind him.
- His strong performance in trade policy builds investor confidence.
Lift for Warsh:
- Trump has praised him as “very highly thought of,” and his central bank roots appeal to markets seeking independence.
- A whisper campaign raising independence concerns would favor a seasoned governor.
Powell’s stance:
Powell has leaned on Fed independence, arguing the central bank sets policy based on data, not presidential pressure. A backlash over perceived politicization could slow Trump’s nomination speed, but a more rash decision wouldn’t shock anyone.
