BlackRock’s Rick Rieder surges in Federal Reserve chair race
Your guide to what Trump’s second term means for Washington, business and the world
BlackRock executive Rick Rieder has emerged as a leading contender in the race for Federal Reserve chair as Donald Trump’s decision on who to nominate to lead the world’s most important central bank looms.
Rieder’s odds on prediction site Polymarket have surged from 6 per cent earlier this week to 34 per cent as of Friday morning, as speculation mounts that the president will back a candidate with close links to Wall Street to replace Jay Powell when his term as chair ends in May.
Trump, who has repeatedly clashed with Powell over the Fed’s refusal to drastically lower borrowing costs, said earlier this week he would announce his pick “in the not too distant future”.
Rieder’s rising odds in betting markets, which echoes increasingly vigorous conversations among investors about his potential candidacy, is the latest twist in a months-long saga about who Trump will choose as Fed chair.
Rieder, who as chief investment officer for global fixed income oversees BlackRock’s $2.4tn bond strategies, is a well-known markets veteran. He has been at BlackRock since his firm R3 Capital Partners was acquired by the asset manager in 2009. Before that he spent two decades at Lehman Brothers.
White House economic adviser Kevin Hassett was long seen as the clear favourite to win Trump’s endorsement. But his odds have tumbled in recent weeks, after the FT reported that big bond investors told the Treasury department that choosing a staunch ally of the president could unnerve markets and inflame worries over central bank independence.
Bets on Hassett cooled further after it emerged earlier this month that the Department of Justice had opened a criminal probe into Powell. The investigation triggered a backlash from former Fed chiefs, international central bankers and senior figures on Wall Street, including JPMorgan chief Jamie Dimon.
Several Republican senators have publicly raised concerns about the independence of the central bank under Trump, and privately questioned whether Hassett in particular would be too willing to bend to the president’s whims. The Senate banking committee, where Republicans have a slim 13 to 11 majority, must hold confirmation hearings and vote on the president’s pick before it can be considered by the full Senate.
Trump said at the end of last week that he would prefer Hassett to remain at the White House, where he is the director of the National Economic Council.
“Until an announcement is made by President Trump, any reporting about the Federal Reserve chairman nominations process is pointless speculation,” said White House spokesperson Kush Desai.
BlackRock declined to comment.
Kevin Warsh, a former Fed governor who has advocated for reform at the central bank and has retained close ties to Wall Street, is now in pole position, with 44 per cent odds on Polymarket.
However, his odds have fallen from 64 per cent earlier in the week as Rieder has surged in popularity.
Rieder — who Trump described in a CNBC interview earlier this week as “very impressive” — said after the Fed’s most recent rate cut that borrowing costs were “still too high for the housing market to [recover] its buoyancy”. He added that small businesses and young households — two groups that tend to rely more heavily on debt — “are still struggling”.
Rieder was considered an outside bet for the role, in part due to political donations made to Democrats. Public records show he donated to campaigns for leading Democrats, including Hakeem Jeffries and Cory Booker, along with Nikki Haley, Trump’s Republican rival in the 2024 presidential primaries.
Some investors, who have also raised concerns over Hassett’s candidacy due to his closeness to Trump, say Rieder would maintain the central bank’s independence to set interest rates free from political pressure.
“Rick is not an ideologue, he’s more pragmatic. He’s more likely to be concerned with his legacy and the legacy of the Fed as an institution,” said an executive at a large US asset manager. “I view Rick to be the best outcome. He is the most market friendly. He is the most independent and will be data driven.”
However, the BlackRock executive shares the Trump administration’s view that Fed officials are overplaying the dangers of inflation to the US economy.
Following the latest consumer price inflation report, Rieder said price pressures were “clearly yesterday’s problem” and that the focus should instead be on the health of the US labour market, which has recently shown signs of weakness.
Comments