Markets are closely watching the US Fed leadership race, with increasing political pressure on interest rates. Recent comments from Jamie Dimon and Donald Trump suggest the outcome remains uncertain, with potential consequences for monetary policy and risk assets, including crypto.
In brief
- Jamie Dimon is supporting Kevin Warsh for Fed chairman, citing alignment with his views on central bank independence and policy discipline.
- Kevin Hassett remains a leading candidate, seen as more willing to quickly cut rates in line with Trump's economic priorities.
- Trump says the decision is not final, with more interviews planned before the Fed chair's announcement.
- The Fed's recent rate cuts and Powell's cautious stance keep crypto and venture markets focused on the next policy move.
The race for the Fed fuels uncertainty over rates and crypto markets
JPMorgan CEO Jamie Dimon has expressed support for former Federal Reserve Governor Kevin Warsh as the possible next chairman of the US central bank. He also noted that Kevin Hassett may be more inclined to support short-term rate cuts.
The CEO shared his views during the private conference of JPMorgan asset management CEOs in New York on Thursday evening, according to people familiar with the discussion.
Dimon acknowledged agreeing with Warsh's past positions on the Federal Reserve and its responsibilities. And as expected, this support further strengthened the former Fed governor's position among the upper echelons of Wall Street. Dimon also told executives that Hassett, currently head of the White House National Economic Council, would likely be quicker to lower interest rates if nominated.
President Donald Trump added to the uncertainty during an interview Friday with The Wall Street Journal, saying that Warsh climbed into the shortlist of candidates competing with Hassett. While Hassett is widely seen as the front-runner, Trump has said both men remain strong options, along with other unnamed candidates.
I think both Kevins are great. I think there are a few other people who are great.
Donald Trump
Earlier this week, Trump suggested he had already made a decision, saying he had a “pretty good idea” of who he would nominate. His latest remarks indicate the process is still ongoing, with interviews continuing and no final choice yet announced.
Trump presses for rate cuts as Fed race heats up
Market expectations surrounding the Fed chair decision are shaped by several factors:
- Jamie Dimon supports Warsh's views on Fed independence and policy discipline.
- Hassett is seen as more aligned with Trump's desire to quickly lower rates.
- White House officials interviewed Warsh earlier this week.
- Trump wants a president willing to act quickly on the cost of borrowing.
- Betting markets continue to favor Hassett.
Trump, Treasury Secretary Scott Bessent and other senior officials interviewed Warsh at the White House on Wednesday, according to reports. At least one other candidate is expected to be interviewed next week, with an announcement possible in the coming weeks.
Pressure on the Federal Reserve remains strong. Trump has repeatedly criticized current Chairman Jay Powell for resisting aggressive rate cuts, holding him responsible for slower growth and higher debt costs. Dimon, however, cautioned that the Fed's independence is important and that political interference can produce negative results.
Fed policymakers cut rates to a three-year low on Wednesday, marking the third straight quarter-point reduction. Powell signaled caution, indicating officials are willing to pause and assess economic conditions. Several regional Fed chairs have supported keeping rates unchanged.
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