Trump to Appoint New Chair Within One Month: How Will This Decision Rewrite the Fate of Federal Reserve Rate Cuts

U.S. Treasury Secretary Janet Yellen recently stated that Trump will decide on the Federal Reserve Chairperson in January. This decision not only concerns who will lead the world’s most important central bank but also relates to the pace of rate cuts in the U.S. in 2026. As current Chair Powell’s term is set to end in May, the market is holding its breath for this personnel decision that could shake global financial markets.

Political Battles Within January

The time window has opened

Yellen’s statement clarifies the timeframe: the announcement of the new Chairperson will be made within January, specifically around Trump’s visit to Davos. This means the decision could be announced in the coming weeks, and the market has already entered a countdown phase.

What are the cards held by the four candidates?

According to the latest news, the candidate list includes Hassett, Vash, Waller, and Reed. Among them, BlackRock Chief Investment Officer Rick Rieder has not yet been interviewed for the Fed Chair position, indicating the selection process is still ongoing and the final candidate remains uncertain.

These four candidates have differing policy stances. Yellen has repeatedly called for the Fed to accelerate rate cuts, implying the Trump administration favors candidates supporting more aggressive monetary easing. Fed Governor Milan recently stated that rate cuts of 150 basis points are needed by 2026, far exceeding market expectations of 1-2 cuts, which may reflect the policy direction the Trump administration hopes to see.

Rate Cut Expectations Become the Core Focus

The policy tug-of-war between the government and the Fed

Yellen explicitly stated in her speech that lower interest rates are “the only missing element for stronger economic growth.” This statement directly pressures the Fed to accelerate rate cuts. Meanwhile, internal divisions exist within the Fed, with the more aggressive faction led by Milan advocating for substantial easing, while the market expects a slower pace of rate reductions.

Currently, the Fed’s benchmark rate is in the 3.5%-3.75% range, with a total of 75 basis points cut in 2025. The new Chairperson will directly determine whether this trend continues.

Market’s True Expectations

From this data, it is clear that the market’s expectations for rate cuts in 2026 are relatively conservative, but government-level calls are notably more aggressive. The new Chairperson will serve as the “referee” between these two expectations.

Deep Implications of Trump Reshaping the Fed

Clear political intent

Trump’s influence on Fed policy is fully reflected in this personnel decision. By choosing a new Chair supporting rate cuts, the Trump administration is effectively safeguarding its economic agenda. Lower rates will support asset prices and stimulate consumption and investment, which are key components of the 2026 “America First” agenda.

Implicit signals from the crypto market

It can be seen from related information that the market’s liquidity expectations are highly sensitive. The Fed’s rate cut decisions directly impact market liquidity, which often first reacts in risk assets like cryptocurrencies. Once the new Chairperson supporting rate cuts is confirmed, the anticipated liquidity release could boost the performance of crypto assets.

Summary

Trump’s decision in January is far more than a personnel appointment; it will determine the future policy tone of the Fed. From Yellen’s repeated calls, Milan’s aggressive stance, to the composition of the candidate list, all point in one direction: the Trump administration hopes the Fed adopts more easing monetary policies. The announcement of the new Chairperson will be one of the most important policy signals this year, and markets should closely watch how this decision influences the rate cut pace and liquidity environment in 2026.