The prediction market underwent a major transformation on Friday when President Donald Trump announced Kevin Hassett would likely remain in his White House position.
The development resulted in higher probabilities for former Federal Reserve governor Kevin Warsh to become the next Fed chair.
MarketWatch reports that Kalshi decreased Hassett’s chances to become Fed chair to 15% from 35% after Trump announced his decision about Hassett’s White House future.
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Trump declared his intention to keep Hassett in his current position when he revealed, “I actually want to keep you where you are if you want to know the truth. Kevin Hassett is so good. ”
Following the comments, Kalshi lowered Hassett’s probability of being nominated to 15% from 35% earlier Friday.
MarketWatch indicates that Warsh has become the most probable candidate to become the next chair of the organization.
The White House National Economic Council now has Hassett as its director, according to Investor’s Business Daily brief. The market responded to this change in expectations through various financial movements.
The market values of gold, silver, copper, and bitcoin decreased while the 10-year Treasury yield reached its highest point since April, according to Investor’s Business Daily.
The market indications point to investor changes in their expectations about interest rates and monetary policy because of the developing nomination process.
Independence in focus, global pushback
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The current political focus on the Federal Reserve occurs while experts discuss the proper level of independence for central banks.
In a speech ahead of the World Economic Forum in Davos, Bank of England Governor Andrew Bailey urged major institutions to “challenge back” against populism and defend global cooperation.
Bailey was among 10 central bank governors, including European Central Bank President Christine Lagarde, who offered “full solidarity” to Fed Chair Jerome Powell after he revealed he had been threatened with legal action.
He said international agencies must sometimes “tell us what we don’t want to hear.
The Federal Reserve faces potential risks from political interference, which Jamie Dimon and economists at JPMorgan Chase warn will increase inflation rates and interest rates, thus exacerbating the current cost-of-living crisis.
The market reacted right away to Trump’s proposal about Hassett’s position through changes in prediction market probabilities, which demonstrated how fast market expectations change.
The situation demands that Bailey protect institutional autonomy because this defense directly affects both monetary credibility and worldwide economic stability.
The market monitors all White House statements along with prediction market movements to establish when investors will get specific market guidance.
