Rising unexpectedly! Meeting with Trump went smoothly on Thursday, calls for BlackRock's Riedel to run for Chairman of the Federal Reserve are increasing.

The selection of the chairman of the Federal Reserve adds another variable at the last moment. According to sources familiar with the matter cited by the media, Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, had a "quite smooth" interview with President-Elect Trump on Thursday. Rieder's most eye-catching and appealing aspect to the Trump government is his advocacy for interest rate cuts, as well as his "atypical" tolerance towards deficits and inflation. In terms of monetary policy, he has consistently advocated for the Federal Reserve to lower interest rates to around 3% as the "neutral level" as the economy evolves. On fiscal issues, Rieder has downplayed concerns in the market about the massive U.S. government deficit. Regarding inflation, he suggests that if a slightly higher inflation rate helps stabilize the debt dynamic and maintain employment, then this kind of inflation is acceptable. With the withdrawal of the top contender Kevin Warsh due to the White House's request for him to remain, Rieder has emerged as one of the frontrunners to wield the power of the Federal Reserve. Predictions from the market platform Polymarket show a significant increase in the odds of Rieder being nominated. "Alternative" views: Loose monetary policy, no worries about deficits, tolerance for inflation (1) Interest rate cuts and "innovation" Although he has never served in the Federal Reserve or government policy departments, Rieder, as one of the most influential voices in the bond market over the past decade, is highly regarded by investors for his views on monetary policy. His core views align with Trump's long-standing criticism of the Federal Reserve for being "too tight." In terms of monetary policy, Rieder believes that the current interest rate level is too high considering the actual situation of economic evolution. He has consistently advocated for the Federal Reserve to lower interest rates to around 3% as the "neutral level" as the economy evolves. He warns that the Federal Reserve overly relies on lagging inflation indicators, ignoring the cooling of economic growth. In his view, long-term maintenance of restrictive interest rates would not only needlessly suppress credit markets but could also lead to a "slowdown" in economic growth. This market micro-structure perspective makes him more inclined to relax policies earlier and more decisively than traditional central bank officials, which is exactly what the White House currently hopes to see. Additionally, while Rieder deems the Federal Reserve's independence "crucial," he also agrees with Treasury Secretary Beasley that the central bank should be "more innovative" in the use of its balance sheet. (2) Tolerance towards deficits and inflation On fiscal issues, Rieder has repeatedly played down market concerns about the massive U.S. government deficit. He believes that strong global demand for U.S. assets, combined with structural forces such as an aging population and high global savings rates, are sufficient to support U.S. debt expansion. He believes that the deficit issue is far easier to manage than critics anticipate. Even more radical is his challenge to the Federal Reserve's absolute doctrine of "price stability." Rieder suggests that if a slightly higher than target inflation rate helps stabilize the debt dynamic and maintain employment, then this kind of inflation is acceptable. Although this view is controversial in orthodox economic circles, it fits perfectly with the Trump administration's goals of "promoting growth and maintaining employment." "A safe option" in the political storm The selection of the Federal Reserve chair is at the center of a political storm in Washington. Last week, the U.S. Department of Justice issued a rare subpoena to current Chairman Powell regarding remarks related to the Federal Reserve headquarters renovation project. Powell retaliated, calling it a political reprisal for not lowering interest rates promptly. This event quickly escalated tensions, with Senate Banking Committee member Thom Tillis issuing a warning that any Federal Reserve nominee would face the most rigorous scrutiny before the investigation was resolved. This tense political environment, however, has become a booster for Rieder. Unlike traditional candidates deeply involved in Washington policy quagmires, Rieder, as a seasoned Wall Street bond trader, is far from political entanglements. Insiders point out that in the Senate confirmation process, Rieder is seen as a "safe option" more likely to pass than other candidates. With Warsh possibly continuing to serve as the Director of the National Economic Council (NEC), this race has substantially narrowed down to a "three-way game": Rieder versus former Federal Reserve Board Governor Kevin Warsh and current Board Governor Christopher Waller. Both have extensive central bank experience and, compared to Rieder's market-oriented background, represent more traditional choices. "Endgame" approaching next week? Treasury Secretary Beasley hinted that Trump plans to officially announce his nomination around the time of the Davos Forum to eliminate market uncertainty as soon as possible. Macro data are also forcing decision-makers to accelerate their decisions. This month's employment data show signs of fatigue in the labor market by the end of 2025, with wage growth slowing down and voter anxiety about living costs turning into pressure for midterm elections. Although the Federal Reserve cut interest rates three times in late 2025, policymakers have hinted that they are not eager to take further action until more data are available, and the market generally predicts that the Federal Reserve's January meeting will remain unchanged. With the range of candidates narrowing down, Trump actively meeting with candidates, and Rieder's appearance at the White House indicating that the Trump administration may be weighing the traditional and non-traditional paths of U.S. monetary policy.