President Donald Trump said Thursday he will announce his pick to replace Jerome Powell as Federal Reserve chairman on Friday morning, ending months of speculation about who will lead the world's most powerful central bank.
Leading candidate Kevin Warsh's anti-QE stance could change the liquidity environment that has supported risky assets, including cryptocurrencies, since 2008.
Trump hints at Friday announcement
“I’ll be announcing the Fed chairman tomorrow morning,” Trump said at the Kennedy Center on Thursday night. He suggested the choice “isn’t going to be too surprising” and is “someone that everyone in the financial world knows.” The president added that “many people think this is someone who could have been there a few years ago.”
Warsh rises in prediction market
Former Fed board member Kevin Warsh emerged as the clear front-runner after a visit to the White House on Thursday. The betting markets moved quickly. Polymarket gave Warsh an 87% chance with $289 million in trading volume. Kalshi showed similar odds: 86% with $74 million in volume.
The rise was rapid. BlackRock Chief Investment Officer Rick Rieder was still the favorite on Wednesday before Warsh overtook him. Economist Justin Wolfers wrote in X that the mere sighting of the White House was “enough evidence for the betting market” to raise Warsh’s odds.
Trump's list of candidates also includes Fed Board member Christopher Waller, who opposed the decision to keep interest rates unchanged this week, and National Economic Council director Kevin Hassett, whom Trump would like to keep in his current position.
Warsh's policy line: interest rate cuts without QE
Warsh served on the Fed's board from 2006 to 2011 and has called for structural reform of the central bank. Macro analyst Alex Krüger summarized Warsh's views in X: he believes that the productivity growth effects of artificial intelligence are deflationary, justifying aggressive interest rate cuts, but the Fed's balance sheet has supported Wall Street and should be significantly reduced.
This combination of a soft interest rate policy and a tight balance sheet is what sets Warsh apart. Deutsche Bank’s Matthew Luzzetti wrote in December that Warsh’s favored “lower policy rate, potentially balanced by a smaller balance sheet” would require regulatory changes to materialize.
RSM chief economist Joseph Brusuelas was more critical. He wrote in X that Warsh’s “first instinct is hawkish” and that he “failed” in policymaking related to the global financial crisis.
The effects of cryptocurrency
Warsh's opposition to QE could weigh on cryptocurrencies, which have historically risen alongside the Fed's balance sheet expansion, which is now around $6.5 trillion, down from $8.9 trillion in 2022.
His stance on digital assets is multifaceted. Warsh invested in stablecoin project Basis in 2018 and asset management firm Bitwise in 2021, where he continues to serve as an advisor.
However, in a 2022 WSJ op-ed, he called private cryptocurrencies a “money play,” writing that “cryptocurrency is a misleading term—it’s not money, it’s software.” He also supported a U.S. Federal Reserve digital currency, which contradicts Trump’s pro-Bitcoin messaging.
Senate confirmation uncertain
While Warsh's nomination seems likely, confirmation is more uncertain. Polymarket estimates that passage by exactly 52 votes is 39% likely—the most likely scenario. Outright rejection is 18% likely, reflecting uncertainty about Senator Tillis' possible veto.
Republican Senator Thom Tillis, a member of the Banking Committee, has vowed to block any Fed nomination until the Justice Department concludes its investigation into Powell, which he called a “pretext” to pressure him.
Powell's term as chairman ends on May 15, although his term on the board runs until January 2028. Trump came close to nominating Warsh in 2018 but ultimately chose Powell — a decision he has publicly regretted.
The Fed kept rates at 3.50% to 3.75% on Wednesday after three rate cuts through 2025. Trump wants rates to be “two or even three percentage points lower.”