Who Will Shape Global Monetary Policy in the Next Era?

Who Will Shape Global Monetary Policy in the Next Era? 

If the article is too long, you can choose a topic to read:

• Why will there be a change in the position of the U.S. Federal Reserve Chair?
• Who will be selected as the Chair of the U.S. Federal Reserve?
• Potential impacts
• Long-term outlook
• Final summary

▶️Why will there be a change in the position of the U.S. Federal Reserve Chair?

In 2026, the United States will enter a significant transition period in monetary policy, as the current Chair of the U.S. Federal Reserve (Fed), Jerome Powell, will complete his term in May 2026. Markets are beginning to share the view that President Donald Trump is unlikely to renominate the incumbent and will instead nominate a new Fed Chair to replace him.

The reason for expecting no renewal is not particularly complex. Powell (the current Chair) is perceived as being “not accommodative enough in monetary policy (not dovish)” in Trump’s view, especially with regard to interest rates. Trump wants interest rates to be cut more quickly and more aggressively to stimulate the economy and financial markets. As a result, there is a high likelihood that a new individual will be appointed. In this article, I will therefore walk through the candidates who are being closely watched as potential next Fed Chairs and examine the direction each might take the Fed.

Let us begin with the first candidate, Kevin Allen Hassett, who currently serves as Director of the National Economic Council and is Trump’s closest economic adviser. Simply put, he is one of Trump’s inner circle. In terms of policy, Hassett clearly supports interest rate cuts, in line with Trump’s preferences. He believes that current interest rates remain too high, and in an interview with Fox News (around October), he stated, “If I were running the Fed right now, I would cut interest rates immediately.”

Another name that Trump is expected to put forward is Kevin Warsh, a former Fed Governor during the 2008 global financial crisis and currently a professor at Stanford University. Although Warsh may not be as close to Trump as Hassett, he is still someone Trump is receptive to, as he also supports interest rate cuts in the short term. In a recent interview with Trump (in December), Warsh affirmed that interest rates should be lower than their current level. 

▶️Who will be selected as the Chair of the U.S. Federal Reserve?

Both Hassett and Warsh have been put forward by Trump, so both have a chance of being selected. However, based on a general survey from the Kalshi Poll (Who will Trump nominate as Fed Chair?), Hassett has a higher probability at 58%, while Warsh stands at 27% (as of December 24, 2025). That said, these figures may shift as the selection period approaches, and it will also be important to observe the stance of financial market participants and individual Fed officials.

▶️Potential impacts

The conduct of Fed policy does not depend solely on the Fed Chair, but is also determined in conjunction with economic data. Therefore, before making decisions, the Fed pays particular attention to inflation figures and the labor market.

The inflation target is around 2%. In the most recent month (November), core PCE (Core Personal Consumption Expenditures Price Index) stood at approximately 2.6%–2.9%, indicating that it remains somewhat above the target. However, it has already declined significantly from its previous peak.

The labor market normally falls within a range of 4.0%–4.5%, with the latest figure at around 4.6%. As a result, the economic narrative has clearly shifted from “inflation concerns” to “growth concerns.”

From a policy perspective, the Fed therefore has a tendency to continue cutting the policy rate to signal support for the economy. This is reinforced by Trump’s supportive stance, as well as by both candidates, who view current interest rates as being higher than appropriate. Accordingly, regardless of who becomes the next Chair of the U.S. Federal Reserve, it is expected that interest rate cuts will continue in the coming year.

▶️Long-term outlook

In the long term, although both candidates have relatively accommodative monetary policy views—which may be positive for the economy in the initial phase—investors should remain cautious about the duration of such easing. Prolonged periods of low interest rates may cause demand to accelerate faster than the economy’s potential, leading to demand-driven inflation. Wages could rise more rapidly and push up service-sector costs (resulting in higher inflation), and ultimately this overheating could spill over into asset price bubbles. This is a risk that markets need to monitor closely, especially at a time when many believe that U.S. equity valuations are no longer cheap.

That said, a candidate such as Warsh may have a slight advantage, as he has demonstrated a relatively more hawkish stance over the long term. Based on his past record as a Fed Governor, he is viewed as being principled in his approach—willing to ease policy during times of crisis, but opposed to prolonged accommodation if it threatens inflation or the credibility of the Fed. This is the main reason why markets and analysts tend to classify him as more hawkish.

▶️Final summary

Ultimately, the selection of the new Fed Chair in 2026—whether between Kevin Hassett (dovish) or Kevin Warsh (hawkish)—is likely to point in the same overall direction: interest rate cuts in the coming year. This aligns with the economic trend of slowing inflation and a softening labor market. The key difference lies in the approach to monetary easing. Hassett may favor lower interest rates for a longer period, supporting equity markets in the short term but increasing the risk of inflation and asset bubbles over the long run. Warsh, on the other hand, while also likely to cut rates early in his term, tends to pursue a more cautious policy stance and place greater emphasis on inflation discipline, which is generally viewed as healthier for the overall equity market.

In January, when more news and information about both key figures are expected to emerge, the picture of the next Fed Chair should become clearer. I will continue to follow developments and provide further updates in due course.

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🏷️Eakanut Peromtukorn, General Securities Investment Advisor, License No. 138635