Trump publicly announced in a television speech that the next Federal Reserve chairperson will soon be revealed, stating that this person will support a 'significant reduction in interest rates,' as a game over the authority of U.S. monetary decision-making and institutional independence enters its final stage.

In a televised address to the nation on the evening of the 17th, Trump stated: 'I will soon announce our next Federal Reserve chairperson.' He clearly indicated that this candidate will support a 'significant reduction in interest rates,' aiming to further lower mortgage repayments.

This is the clearest timetable he has provided regarding adjustments in the Federal Reserve leadership since he took office again as president. Just the day before the speech, Trump interviewed Federal Reserve Governor Christopher Waller.

I. Power Struggle

● The conflicts between Trump and current Federal Reserve Chair Powell have become public. Since Trump assumed the presidency again in January this year, he has repeatedly accused the Federal Reserve of being too slow in cutting interest rates and even threatened to remove Powell from his position.

● The focus of the contradiction is on interest rate policy. Trump believes that the current benchmark interest rate set by the Federal Reserve at around 4.3% is too high, stating that for every percentage point increase in rates, it would add $360 billion in refinancing costs to the U.S. annually.

● After the Federal Reserve announced an interest rate cut on December 10, Trump still complained that the cut was 'too small,' insisting that 'U.S. interest rates should be the lowest in the world.'

II. The Battle of the Four

The main candidates currently attracting market attention include four: Kevin Warsh, Kevin Hassett, Christopher Waller, and Michelle Bowman.

● Kevin Warsh is viewed as the top competitor. This former Federal Reserve governor has long been considered a loyal ally of Trump, but it is worth noting that his 'inflation phobia' may be too severe, having strongly opposed quantitative easing as early as 2010.

● Kevin Hassett, as the Director of the National Economic Council, is one of the longest-serving economic advisors in the Trump administration. However, some senior officials closely related to Trump reportedly oppose Hassett's nomination.

● Christopher Waller is viewed by the market as the 'safest' choice. This current Federal Reserve governor is neither hawkish nor dovish and is known for strictly adhering to data-driven approaches. Trump just interviewed Waller on the 17th and praised him as 'great.'

● Michelle Bowman, as the Vice Chair for Supervision at the Federal Reserve, has also received praise from Trump. She has served as a Federal Reserve governor since 2018 and is known for promoting the rollback of cumbersome regulations.

III. Institutional Shock

This nomination storm touches on the core issue of the U.S. financial system — the independence of the Federal Reserve.

● Historically, policy differences between the president and the Federal Reserve chair have not been uncommon, but Trump's actions have surpassed previous boundaries. In mid-July, reports surfaced that Trump had drafted a letter to dismiss Federal Reserve Chair Powell.

● The market reacted strongly to this. After the report was released, the U.S. stock market, foreign exchange market, and bond market experienced a 'triple kill' phenomenon. The three major stock indexes fell significantly, the dollar index declined, and U.S. Treasury yields rose.

● Wall Street is generally concerned about this. Jamie Dimon, CEO of JPMorgan Chase, publicly stated, 'Using the Federal Reserve for political purposes could have negative consequences.' He is the first head of a major U.S. financial institution to openly respond to the Trump administration's sharp criticism of Powell.

IV. Market Volatility and Institutional Game

Market concerns about the uncertainty of U.S. economic policy have already led to real consequences. A rare 'triple pressure' risk scenario has emerged in global markets, where U.S. stocks, U.S. bonds, and the dollar are being sold off simultaneously.

● This uncertainty not only affects the U.S. domestically but could also accelerate the global process of de-dollarization. Multiple analysts warn that if market participants believe the independence of the Federal Reserve is weakening, financial assets could experience significant volatility.

● One of the biggest risks is that investors sell U.S. Treasury bonds, which could push up the interest rates of long-term bonds relative to short-term bonds in the U.S. bond market. Some are concerned this could trigger a range of issues from trading disruptions to inflation rebounds.

● On the political front, there are also divisions within the Republican Party. Legislators overseeing financial and budget matters warn that ending the independence of the Federal Reserve would be a huge mistake. This indicates a tension between maintaining the financial system and supporting presidential executive power.

V. Multiple Challenges After Nomination

● Regardless of who ultimately receives the nomination, they will face multiple challenges. First and foremost is the Senate confirmation process, which could take several months. Powell's term will last until May 2026, meaning that even if a new nominee is selected, the transition may take time.

● Trump seems to have considered this timing issue. Reports indicate he is contemplating appointing a 'shadow chair' for the Federal Reserve before Powell's departure to pressure the Fed into lowering interest rates.

● The divergence in monetary policy paths is another major challenge. Trump clearly stated in an interview that he hopes the federal funds rate will be lowered to '1% or even lower' within a year. This target is significantly different from the current range of 3.5% to 3.75%.

● Against the backdrop of unclear inflation prospects, significant interest rate cuts could bring the risk of inflation rebound. U.S. tariff policies are influencing the Federal Reserve's interest rate decision-making process, and the new chair will need to find balance in this complex environment.

There are also policy differences within the Federal Reserve. In the most recent interest rate cut decision, three Federal Reserve officials expressed dissent, indicating that even with a change in leadership, coordinating different policy positions will still be difficult.

The renovation budget for the Federal Reserve headquarters has increased from an initial $1.9 billion to nearly $2.5 billion, and this controversy over 'luxurious renovations' has become one of the levers for the Trump administration to pressure Powell.

The names of the candidates have appeared in Trump's public remarks in succession, but the market is more focused on the political reality that whoever ultimately takes office will face a president who clearly demands interest rates be lowered to '1% or even lower.'

Wall Street traders are analyzing each candidate's policy inclinations while being alert to potential fluctuations in the U.S. Treasury market — the market they view as the cornerstone of the global financial system is facing a game of institutional and power dynamics.

Join our community to discuss and become stronger together!

Official Telegram community: https://t.me/aicoincn
AiCoin Chinese Twitter: https://x.com/AiCoinzh

OKX welfare group: https://aicoin.com/link/chat?cid=l61eM4owQ
Binance welfare group: https://aicoin.com/link/chat?cid=ynr7d1P6Z