‘A dangerous game’: Trump’s power grab at the Fed carries grave economic risks

Expert warn of trouble ahead if a rate-cutter is installed as the chair of the Federal Reserve, writes Katie McQue

- Katie McQue

Rick Rieder, chief investment officer of global fixed income at BlackRock, has emerged as a leading contender to succeed Jerome Powell as Federal Reserve chair, with prediction markets showing his odds rising after his recent interview with President Donald Trump.

On Saturday afternoon, the prediction betting site Polymarket put Rieder’s odds to become Trump's pick for the job at 53%, ahead of former Fed official Kevin Warsh, at 29%, and Christopher Waller, at 7%. Rieder is known for his market-oriented views on interest rates, having publicly discussed the case for lowering rates under certain economic conditions.

Trump told reporters last year: “If I think somebody's going to keep the rates where they are or whatever, I'm not going to put them in. I'm going to put somebody that wants to cut rates.”

Rieder is a Wall Street veteran. Having spent two decades at Lehman Brothers, he now oversees $2.4tn in bond strategies at BlackRock. Also in his favour: he has never worked at the Fed.

In recent months, Trump has launched a broadside against the independence of the central bank, attempting to fire governor Lisa Cook, and launching a lawsuit against Powell over cost overruns at the Fed’s historic buildings.

In 1978, as a protection from political meddling, the US Congress formally gave the Fed the dual mandate of maximising employment and maintaining price stability. It structured the institution to operate independently of day-to-day political control.