Can Dark Horse Riddell, the Next Fed Chair, Bring About a Bull Market?

Original Title: "Rieder - Two Weeks Ago 'Nobody Cared,' Now 'Most Likely to Be Nominated' for New Fed Chair"

Original Author: Zhao Ying, Wall Street News

BlackRock executive Rick Rieder was considered an outsider just two weeks ago but is now the most likely candidate in the prediction markets to succeed current Chair Powell. With his advocacy for rate cuts and attention to the actual impact of monetary policy, he is becoming the "golden-haired girl" candidate in Trump's eyes—both supporting rate cuts and not widely seen as a threat to Fed independence.

According to Barron's on Tuesday, Trump, who interviewed Rieder earlier this month, called him "very impressive." Like Trump, Rieder has been explicit about the need for lower rates. His focus on the real-world impact of monetary policy, especially in areas like the housing market, aligns closely with the Trump administration's emphasis on affordability.

According to Polymarket data, as of Monday afternoon, Rieder has a 43.5% probability of being nominated, leading former Fed Governor Kevin Warsh at 29%, current Fed Governor Christopher Waller at 9.2%, and National Economic Council Director Kevin Hassett at 7.2%. Trump has repeatedly hinted that he hopes to keep Hassett in his current White House role, which may narrow the field of candidates.

Powell's chairmanship will end in mid-May. White House spokesperson Kush Desai stated that any reports on the Fed chair nomination process are "meaningless speculation" until Trump makes an official announcement. The nominee must be confirmed by the Senate.

Policy Advocacy: Emphasis on Productivity Reforms, Skepticism of Lagging Data

Rieder's central view is that the Fed relies too heavily on inflation data that reflects past conditions and lacks focus on economic changes. He believes that productivity gains from AI, automation, and logistics are reshaping the economy and labor market, but traditional metrics are slow to capture the speed of these changes. In his view, policy decisions have a long-term lagged impact on the economy.

A BNP Paribas analyst noted that Rieder agrees with the Fed's 2% annual inflation target and its communication approach but holds economic outlooks beyond the consensus. He places greater emphasis than current Fed officials on the scale and persistence of productivity gains and their impact on growth, inflation, and the labor market.

Founder of the independent research firm 42 Macro, Darius Dale, stated that inflation data often peaks late in the business cycle, and policy decisions based on this data come too late. Dale believes Rieder understands the scale of the ongoing productivity shift and the pressures high rates place on housing and labor liquidity. "The committee presents the chair's personality traits," Dale said, "at a moment of structural change, you need someone who understands market and economic trajectories."

Housing Market Becomes Policy Focus

Housing has been at the core of Rieder's public remarks. Mortgage rates remain elevated, and since the Fed began raising rates in 2022, housing activity has sharply slowed, affordability has worsened, despite slight improvement in recent months. Rieder has stated that high rates have reduced housing turnover, constrained labor mobility, and slowed construction activity. These dynamics affect both employment and prices.

Trump has prioritized lowering mortgage rates, a stance on housing that aligns perfectly with Rieder's agenda. This position is appealing to the White House.

Rieder also frequently discusses inequality and the distribution effects of monetary policy. In a 2024 interview with The Wall Street Journal, he stated that high rates have the most significant impact on borrowers, renters, and young families, benefiting savers. He said that the high cost of borrowing has had a harmful effect on low-income consumers, with little apparent benefit in terms of inflation.

Some Democrats have long believed that Fed rate hikes hit low-income families the hardest. Rieder's comments echo this concern while still staying within the Fed's existing framework.

Path from Wall Street to Washington

Rieder joined BlackRock in 2009 during the credit market turmoil. BlackRock had acquired his $1.5 billion hedge fund, R3 Capital Management, which he had founded. Rieder was a prominent executive at Lehman Brothers, and when Lehman collapsed during the 2008-09 financial crisis, he sold his stake in R3 Capital, which BlackRock then acquired to expand its fixed-income portfolio management team.

This deal paid off. Nearly 20 years later, the assets under management have grown significantly. BlackRock CEO Larry Fink noted in this month's earnings call that the actively managed fixed-income funds led by Rieder saw inflows across all active trading fund platforms in 2025.

Several BlackRock executives have shuttled between Wall Street and Washington. Former President Biden appointed Fink's former chief of staff Wally Adeyemo as Deputy Treasury Secretary. BlackRock's former head of Sustainable Investing Brian Deese served as Biden's National Economic Council director, and the company's former Chief Investment Strategist Mike Pyle advised former Vice President Harris before returning to BlackRock.

Rieder's nomination would extend this pattern to a Republican administration. It will also raise common questions about conflicts of interest. Rieder's career relies on bets tied to interest rates and macroeconomic forces, some of which are influenced by the central bank. Former officials in the Trump administration who had amassed wealth in the financial sector, such as Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, faced similar scrutiny.

Rieder is no stranger to the Fed. He has served on the Federal Reserve's Financial Markets Advisory Committee, providing an outside view to policymakers.

Policy Pivot Space Still Uncertain

While Rieder's views have garnered attention, the Fed's policy remains deeply influenced by the sharp rise in inflation during the pandemic. Policymakers have emphasized the risks of premature policy easing. A BNP Paribas analyst warned that entrenched Fed views on inflation could limit any policy pivot under a new chair.

Warsh remains a strong contender, but his advocacy for internal Fed reforms has raised concerns among some current and former officials. He has at times downplayed the market's reaction to policy decisions. In contrast, Rieder's views may align more with Trump's expectations.

Rieder's rapid ascent also underscores growing scrutiny on how monetary policy intersects with housing, labor, and productivity at a time of elevated rates and increasingly ambiguous economic signals. This has propelled him quickly from the periphery of the conversation to the center stage, possibly positioning him to take Powell's seat in May.

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