BlackRock’s Rick Rieder surges ahead in race to chair Federal Reserve
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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 the prediction site Polymarket surged from 6 per cent earlier this week to 47 per cent by Friday afternoon, on bets the US president would back a candidate with close links to Wall Street to replace Jay Powell when his term as chair ends in May.
The abrupt jump places Rieder in the top position on Polymarket.
Trump, who has repeatedly clashed with Powell over the Fed’s refusal to drastically lower borrowing costs, this week said he would announce his pick “in the not too distant future”.
Rieder’s rising odds in betting markets mark the latest twist in a months-long saga about who Trump will choose as Fed chair.
Treasury department officials have recently sounded out big bond investors about Rieder, and former Fed governor Kevin Warsh, seen as another strong contender for the job, said several people with knowledge of the matter.
Treasury maintains regular contact with market participants, but the questions about Rieder have become more pointed recently, some of the people added. The Treasury did not immediately respond to a request for comment.
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 the asset manager since BlackRock acquired his firm R3 Capital Partners 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 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’s testimony. The investigation triggered a backlash from former Fed chiefs, international central bankers and senior figures on Wall Street, including JPMorgan chief executive Jamie Dimon. The Fed has defended Powell’s testimony.
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.
Warsh, who has advocated for reform at the central bank after his term as a Fed governor ended in 2011, was previously in pole position. His odds on Polymarket were 35 per cent by Friday afternoon, down from 64 per cent earlier in the week.
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 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 because of 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 because of 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,” said an executive at a large US asset manager. “He’s more likely to be concerned with his legacy and the legacy of the Fed as an institution. 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.
Letter in response to this report:
A portfolio manager’s portfolio manager / From Rajiv Dadlani, San Francisco, CA, US
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