2025-12-19 13:53:00
CNBC was earlier out with a report saying that the Fed’s Waller had a ‘strong interview’ for Fed chair.
That begs the question: What does a strong interview with Trump look like?
A pledge to lower rates? A pledge to take orders?
I take this as CNBC trying to save us from one of the Kevins. I don’t put any stock in PredictIt but it has Waller at 14-cents, up from 8-cents yesterday so he’s still a longshot. The numbers seem to move with the newsflow but despite Waller ticking up, Hassett held at 52-cents and all the movement was in Warsh dipping to 23-cents.
For me, I think Warsh is more likely than priced. Trump repeatedly said he regretted not picking him the last time around and Warsh has been relentlessly sucking up lobbying for the job.
Other notable notes from the report:
- Bowman is no longer a candidate
- Rick Reider will be interviewed in the last week of the year
That last detail gives us a better timeline of when the decision will come. Trump had floated making it ‘in the next couple weeks’ but it looks like it will be close to the end of that window.
In his speech Wednesday, Trump said, “I will soon announce our next
chairman of the Federal Reserve, someone who believes in lower interest
rates by a lot, and mortgage payments will be coming down even further.”
Despite three doves being the front-runners for the Fed job, the market is only pricing 60 bps in easing in the coming year because of persistent inflation and runaway US spending that’s keeping growth on track. More recently, the fall in oil prices to five-year lows could help to make a stronger case for rate cuts. This week’s CPI report was also low but it was almost-certainly due to statistical noise because of the government shutdown and the inability to collect data.
US CPI y/y
If Waller were to get the Fed job, it would be comforting for the bond market, pushing down longer-dated yields and creating confidence that the US won’t rekindle runaway inflation with too-low rates.
On the flipside, there could be some disappointment in equity markets that an overly-dovish chair like Kevin Warsh or Kevin Hassett didn’t get the job.
