Kalshi Prediction Odds Favor Hassett But Any Fed Pick Could Clash With Trump Fast
President Donald Trump is expected to name a new Federal Reserve chair to replace Jerome Powell when Powell’s term ends in May, but economists say the choice may face immediate pressure from both the White House and the economy.
Capital Economics argues the central bank may not be able to cut interest rates as aggressively as Trump has demanded. In a Thursday note, the firm said a surge in investment tied to artificial intelligence looks like the start of a multiyear capital-spending boom. It forecasts U.S. GDP growth holding at a strong 2.5% in both 2026 and 2027, even with a softer job market slowing consumer spending.
With core inflation likely to remain above the Fed’s 2% target for an extended period, Capital Economics expects only a single 25-basis-point rate cut in 2026. That outcome, the firm said, could put Trump and his new Fed chair “at loggerheads almost immediately.”
Trump has openly pushed for much bigger cuts. After a quarter-point reduction that brought rates to 3.5%–3.75%, he complained the move could have been “at least doubled,” and earlier suggested rates should fall as low as 1%—a level more often associated with recessions than steady expansion.
Potential candidates include National Economic Council director Kevin Hassett, Fed governor Christopher Waller, and former Fed governor Kevin Warsh. Prediction market Kalshi currently prices Hassett as the favorite at 54% odds, followed by Warsh at 24% and Waller at 14%.
Capital Economics expects business investment to rise 6.5% in 2026 and accelerate to 7.4% in 2027 as AI adoption spreads beyond tech into sectors like finance, real estate, and health care. It also warns Trump’s tariffs could keep inflation sticky, and that undermining Fed independence to force cuts could backfire by pushing long-term interest rates higher. Citi Research is less optimistic, projecting about 2% growth next year and room for 75 basis points of cuts as the labor market weakens further.