A dark horse emerges! Meeting with Trump on Thursday went smoothly, and BlackRock's Rieder is gaining momentum as a candidate for Federal Reserve Chair.
The selection of the Federal Reserve Chair has taken a new turn at the last moment.
Citing sources, media reports say that Rick Rieder, BlackRock's Global Chief Investment Officer of Fixed Income, had a "quite smooth" interview with President-elect Trump on Thursday.
What caught the market's attention about Rieder, and what matches the Trump administration's preferences most, are his advocacy for rate cuts, as well as his “atypical” tolerance for deficits and inflation.
On monetary policy, he consistently advocates for the Fed to lower interest rates to a “neutral level” of around 3% as the economy evolves. On fiscal matters, Rieder has repeatedly downplayed market concerns about the huge U.S. government deficit. On inflation, he suggests that if inflation slightly above target helps stabilize debt dynamics and maintain employment, then such inflation is not unacceptable.
With former frontrunner Kevin Hassett largely dropping out due to a need to stay at the White House, Rieder has emerged as one of the leading candidates for the Fed chairmanship. Prediction market Polymarket shows that Rieder’s nomination odds have risen sharply recently.
“Alternative” Positions: Monetary Easing, No Worry About Deficits, Inflation Tolerance
(1) Rate Cuts and “Innovation”
Although he has never worked in the Fed or government policy departments, Rieder is one of the most influential voices in the bond markets over the past decade, and his views on monetary policy are highly respected by investors. His core positions align closely with Trump’s longstanding criticism of the Fed’s “over-tightening”.
On monetary policy, Rieder believes that given the reality of economic evolution, current interest rates are too high. He consistently advocates for the Fed to lower rates to a “neutral level” of around 3% as the economy evolves.
He warns that the Fed relies excessively on lagging inflation indicators, ignoring the cooling of economic growth. In his view, if restrictive rates are maintained for too long, it will needlessly suppress credit markets and could even cause economic growth to “stall”.
This perspective based on market microstructure has led him to prefer earlier and more decisive policy easing than traditional central bankers—exactly what the White House wants to see right now.
In addition, while Rieder says Fed independence is “crucial”, he also shares Treasury Secretary Besant’s view that the central bank should be “more innovative” in its use of the balance sheet.
(2) “Atypical” Tolerance for Deficits and Inflation
On fiscal matters, Rieder has repeatedly downplayed concerns about the U.S. government’s huge deficit. He believes that strong global demand for U.S. assets, combined with structural factors such as aging demographics and high global savings rates, are sufficient to support America’s debt expansion. He believes the deficit problem is much more manageable than critics claim.
More radically, he challenges the Fed’s absolute dogma of “price stability”. Rieder suggests that if an inflation rate slightly above target helps stabilize debt dynamics and maintain employment, then such inflation is not unacceptable. While this view is quite controversial among orthodox economists, it aligns perfectly with the Trump administration’s goal of “promoting growth and preserving jobs”.
“Safe Option” Amid Political Storm
The selection of the Fed Chair is taking place at the center of Washington’s political storm.
Last week, the U.S. Department of Justice unusually subpoenaed current Chair Jerome Powell regarding comments about the Fed headquarters renovation project. Powell countered that this was political retaliation for not cutting rates quickly. The incident quickly intensified tensions, prompting Senate Banking Committee member Thom Tillis to warn that any Fed nominee will face the strictest scrutiny before the investigation is resolved.
This tense political environment has actually become a boost for Rieder. Unlike traditional candidates mired in Washington policy disputes, Rieder—an experienced Wall Street bond trader—stays distant from political entanglements. Sources say that in Senate confirmation hearings, Rieder is considered a “safe option” more likely to pass than other candidates.
With Hassett likely to stay on as NEC Director, the race has essentially narrowed to a “three-way contest”: Rieder versus former Fed Governor Kevin Warsh and current Governor Christopher Waller. Both have extensive central banking experience; compared to Rieder’s market-centric background, they represent more traditional choices.
“Endgame Moment” Next Week?
Treasury Secretary Besant has hinted that Trump plans to formally announce his pick around the Davos Forum, to remove market uncertainty as soon as possible.
Macroeconomic data is also accelerating decision-making. Employment data released this month shows the labor market weakening by late 2025, with wage growth slowing and voter anxiety over living costs converting into midterm election pressure.
While the Fed cut rates three times at the end of 2025, officials have indicated they won’t act again until more data comes in; the market broadly predicts the Fed will hold steady at its January meeting.
As the list of candidates narrows, Trump is actively meeting them. Rieder’s appearance at the White House suggests the administration may be weighing both traditional and non-traditional paths for the future of U.S. monetary policy.
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