From "Outsider" to Top Contender: Will Fed Chair Dark Horse Riedl Spark a Rate-Cut Bull Market?
- Core View: BlackRock executive Rick Riedl is rapidly emerging as a top contender to succeed Powell as Fed Chair, thanks to his clear stance advocating for rate cuts and his focus on the real-world impact of monetary policy, particularly on the housing market. His policy leanings align closely with the Trump administration's priorities.
- Key Elements:
- Leading Market Predictions: On the Polymarket prediction platform, Riedl's probability of being nominated stands at a high 43.5%, significantly ahead of other candidates.
- Distinct Policy Stance: He criticizes the Fed for over-reliance on lagging inflation data, emphasizing the need to pay greater attention to productivity transformations driven by AI and automation and their economic impact.
- Focus on Housing Market: He places core concern on the negative effects of high interest rates on housing affordability and labor mobility, which aligns perfectly with Trump's priority agenda of lowering mortgage rates.
- Attention to Distributional Effects: He points out that high interest rates disproportionately impact borrowers, renters, and low-income households, a view that resonates with long-standing concerns of some Democrats.
- Background and Controversy: Possesses a deep Wall Street background and Fed advisory experience, but his nomination could invite scrutiny regarding potential conflicts of interest from the financial industry.
Original Title: "Riedel—From 'No One Cared' Two Weeks Ago to 'Most Likely to Be Nominated' for New Fed Chair"
Original Author: Zhao Ying, Wall Street News
BlackRock executive Rick Rieder, considered an outsider just two weeks ago, has now become the most likely candidate to succeed current Chairman Powell in prediction markets. With his advocacy for interest rate cuts and focus on the real-world impact of monetary policy, he is becoming the "Goldilocks" candidate in Trump's eyes—supportive of lowering rates without being widely seen as a threat to the Fed's independence.
According to a Barron's report on Tuesday, Trump, after interviewing Rieder earlier this month, called him "very impressive." Like Trump, Rieder has explicitly stated that interest rates should be lower. His focus on the real-world impact of monetary policy, particularly in areas like the housing market, aligns closely with the Trump administration's emphasis on affordability.
Data from Polymarket shows that as of Monday afternoon, Rieder had a 43.5% probability of being nominated, leading former Fed Governor Kevin Warsh (29%), current Fed Governor Christopher Waller (9.2%), and National Economic Council Director Kevin Hassett (7.2%). Trump has repeatedly hinted at wanting to keep Hassett in his current White House role, which may have narrowed the field.
Powell's term as Chair ends in mid-May. White House spokesperson Kush Desai stated that any reporting on the Fed Chair nomination process before Trump makes a formal announcement is "meaningless speculation." The nominee must be confirmed by the Senate.
Policy Stance: Emphasizing Productivity Transformation, Questioning Lagging Data
Rieder's core argument is that the Fed relies too heavily on inflation data that reflects past conditions and pays insufficient attention to economic changes. He believes productivity gains from AI, automation, and logistics are reshaping the economy and labor market, but traditional metrics capture these changes too slowly. In his view, there is a long lag between policy decisions and their economic impact.
Analysts at BNP Paribas noted that Rieder agrees with the Fed's 2% annual inflation target and its communication style but holds an economic outlook beyond the consensus. He places greater emphasis than current Fed officials on the scale and persistence of productivity gains and their effects on growth, inflation, and the labor market.
Darius Dale, founder of independent research firm 42 Macro, said inflation data often peaks late in the business cycle, making policy decisions based on that data arrive too slowly. Dale believes Rieder understands the scale of the ongoing productivity shift and the pressure high rates place on housing and labor mobility. "The committee takes on the personality of the chair," Dale said. "At a moment of structural change, you need someone who understands where markets and the economy are going."
Housing Market Becomes Policy Focus
The housing issue is central to Rieder's public remarks. Mortgage rates remain elevated, and housing activity has slowed sharply since the Fed began raising rates in 2022, with affordability worsening, though it has improved slightly in recent months. Rieder has stated that high rates reduce housing turnover, limit labor mobility, and slow construction activity. These dynamics affect both employment and prices.
Trump has made lowering mortgage rates a priority, and Rieder's emphasis on housing fits perfectly with this agenda. This stance holds obvious appeal for the White House.
Rieder also frequently discusses inequality and the distributional effects of monetary policy. In a 2024 interview with The Wall Street Journal, he said high rates hurt borrowers, renters, and younger families the most while benefiting savers. He stated that high borrowing costs have a harmful impact on lower-income consumers without delivering clear gains on inflation.
Some Democrats have long argued that Fed rate hikes disproportionately hurt lower-income households. Rieder's comments echo this concern while remaining within the Fed's existing framework.
The Path from Wall Street to Washington
Rieder joined BlackRock in 2009 during credit market turmoil. At the time, BlackRock acquired his $1.5 billion hedge fund, R3 Capital Management, which he founded. Rieder was previously a prominent executive at Lehman Brothers, which sold its stake in R3 Capital when it collapsed during the 2008-09 financial crisis. BlackRock bought the fund to expand its fixed-income portfolio management team.
The deal paid off. Nearly 20 years later, assets under management have grown significantly. BlackRock CEO Larry Fink noted on this month's earnings call that the actively managed fixed-income funds led by Rieder led inflows across all active trading platform ETFs in 2025.
Several BlackRock executives have moved 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 firm'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 would also raise familiar questions about conflicts of interest. Rieder's career relies on bets related to interest rates and macroeconomic forces, which are partly driven by the central bank. Officials in the Trump administration who previously amassed wealth in finance, such as Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, face similar scrutiny.
Rieder is no stranger to the Fed. He previously served on the Fed's Financial Markets Investment Advisory Committee, which provides policymakers with external perspectives.
Questions Remain About Scope for Policy Shift
Despite the attention Rieder's views have garnered, Fed policy remains deeply shaped by the post-pandemic inflation surge. Policymakers have consistently emphasized the risks of easing policy too soon. BNP Paribas analysts warn that the Fed's internal views on inflation are deeply entrenched, potentially limiting the scope for a policy shift under any chair.
Warsh remains a strong contender, but his advocacy for internal reforms at the Fed has raised concerns among some current and former officials. He has sometimes downplayed the importance of market reactions to policy decisions. In contrast, Rieder's views may align more closely with Trump's expectations.
Rieder's rapid rise also reflects growing attention to how monetary policy intersects with housing, labor, and productivity at a time when rates remain high and economic signals are increasingly difficult to interpret. This has propelled him quickly from the fringes of the conversation to its center and could land him in Powell's seat come May.
