[비즈한국] The U.S. Federal Open Market Committee (FOMC) meeting scheduled for this week is emerging as a key variable for global financial markets at the year's end. Concerns are mounting that, beyond mere interest rate adjustments, the situation could mark a turning point for monetary policy direction as it intersects with the selection process for the next Federal Reserve (Fed) Chair.
On the 2nd (local time), during an event at the White House announcing a large donation from Michael Dell, founder and CEO of the U.S. computer manufacturer Dell Technologies, and his wife, U.S. President Donald Trump pointed to Kevin Hassett, Chairman of the White House Council of Economic Advisers (NEC), and remarked, “Maybe a potential Fed Chair is also here.” He then repeatedly emphasized the word “potential,” adding, “He is a respected man.”
This suggests that discussions regarding the selection of the next Fed Chair are well underway beneath the surface. President Trump has continuously criticized incumbent Chair Jerome Powell for being passive on interest rate cuts, and he is effectively pushing for a successor to replace Powell, whose term expires next May.
Hassett himself stated in a recent interview with Fox News that he would “gladly serve if Trump nominates me,” leading to assessments that he is effectively at the center of the pool of candidates for the next chair.
The market views Hassett as a pro-Trump figure inclined toward monetary easing. His track record as a key player in "Trumponomics," including tax cut policies, implies a high probability that he would pursue aggressive easing in monetary policy.
However, it is uncertain whether these expectations will immediately lead to market stability, as disagreements within the FOMC have already been identified.
Park Sang-hyun, a researcher at iM Securities, pointed out, "If the next Fed Chair is appointed early next year as President Trump's remarks suggest, it could trigger a lame-duck phenomenon for Chair Powell, potentially intensifying the policy conflict within the Fed, which is already showing signs of division." Park added, "President Trump will likely try to push for strong monetary easing through the appointment of a new Fed Chair, but it is unclear whether the divided Fed will be able to properly support such policies."
Regarding the outlook for the December FOMC, Park observed, "While financial markets expect an additional interest rate cut at the December meeting, we anticipate a significant number of dissenting votes even if a cut is decided. Given the leanings of current FOMC members, an interest rate cut is expected to be decided by a narrow majority, and while the probability is low, we cannot rule out the possibility of an unexpected decision to freeze rates."
While uncertainty regarding policy clashes and the lame-duck phenomenon may be highlighted in the short term as the selection process for the next chair intensifies early next year, the mid- to long-term perspective is somewhat different.
Jeong Hae-chang, a researcher at Daishin Securities003540, stated, "From a mid- to long-term perspective, the direction of the U.S. economic slowdown and policy stimulus remains valid as an investment point. Regardless of whether a cut occurs in December, the long-term policy rate, expected to be around 3% on the dot plot, is within reach."
Jeong said, "Even if hawkish comments emerge, such as the need to adjust the pace of cuts, it will not undermine the mid- to long-term monetary policy path," but added, "The long-term benchmark interest rate path on the dot plot needs to be verified."
Park Seok-hyun, a researcher at Woori Bank, also forecasted, "If the median of the dot plot indicates only one or fewer cuts next year, it will be difficult to fully resolve uncertainty regarding the Fed's monetary policy stance. Conversely, if it meets market expectations by suggesting a path of two or more cuts, it will act as a catalyst for a year-end rally."
The Fed is highly likely to continue its trend of interest rate cuts through next year. The AI investment cycle and the global easing trend support the direction of growth. However, political variables triggered by President Trump's remarks and the chair selection, as well as internal disagreements at the Fed and the potential for a lame-duck situation, could increase uncertainty and volatility during the monetary policy process.
Ultimately, what investors need is to read and respond to the mid- to long-term direction amidst the volatility. Researcher Jeong Hae-chang advised, "It is possible to increase exposure to leading sectors—such as semiconductors, holding companies, shipbuilding, defense, securities, and cosmetics—that have gained price attractiveness during the November correction by utilizing the volatility. Undervalued sectors such as automotive and bio also still hold high stock appeal."