Powell unexpectedly remains in charge of the FOMC, and the Federal Reserve's policy outlook for 2026 faces the "biggest uncertainty"

The Federal Reserve has suddenly broken a 25-year tradition. On February 18th, local time, the minutes from the January FOMC meeting revealed surprising personnel arrangements: Powell has been designated as the FOMC Chair until a formal successor is appointed. This decision has sent ripples through global financial markets, causing waves one after another.

The key point is that as long as Powell remains a Federal Reserve Board member and the highly watched nomination of Waller is not confirmed by the Senate, he will continue to hold the reins of monetary policy until June. This “gap” in timing is becoming the biggest source of uncertainty in global capital markets.

Breaking 25-Year Tradition: Unusual Transition in FOMC Leadership

Nick Timiraos, a well-known financial journalist dubbed the “New Federal Reserve Correspondent,” bluntly states: this is an “unconventional arrangement” during the transition period. Reviewing the FOMC meeting records from 2006, 2014, and 2018, there are no precedents for such a situation.

What was the usual practice? Yellen was confirmed by the Senate before the January 2014 FOMC meeting; Powell was confirmed before the January 2018 meeting; Bernanke received final approval on the day of the 2006 meeting. Personnel transitions were typically settled well before critical timing points to ensure a smooth handover of power.

But this time, the Fed has broken with tradition. Powell is forced to continue in an “acting” capacity, maintaining control amid extreme policy uncertainty—an unusual occurrence in the history of Fed leadership transitions.

Unclear Policy Direction: US Dollar, US Stocks, and Crypto Markets Face Expectations Test

The personnel uncertainty has far-reaching effects beyond Washington’s decision-making circles. No one can give a clear answer on how Fed policy will evolve by 2026.

Core decisions such as interest rate adjustments, pace of rate cuts, and inflation responses—key factors influencing global capital flows—may fluctuate due to the transitional personnel situation. The US dollar exchange rate, stock market trends, and even crypto market sentiment will be directly affected by these expectations. While Powell’s interim leadership has maintained policy continuity, it also fuels market speculation about potential policy shifts once a new chair takes office.

Currently, market expectations for rate cuts before 2026 are diverging. Some analysts believe that policy uncertainty during the transition could delay the rate-cutting cycle; others argue that Powell, as the current chair, may have a sharper risk awareness than the incoming leader. This divergence in expectations is itself driving cross-market capital flows.

When Will Waller’s Nomination Break Through? Can Powell’s “Caretaker” Hold Until Mid-Year?

The core question is: when will Waller’s confirmation be completed?

If Waller’s nomination remains unconfirmed for a long time, Powell will continue as a “transitional leader” until a new chair is officially appointed. This uncertain “caretaker” status could extend through the entire first half of the year, possibly beyond June.

Every FOMC meeting, economic data release, and Senate confirmation news could rewrite market expectations for future policy. In this environment of high uncertainty, institutional investors tend to adopt a defensive stance, while retail investors face increased emotional volatility risks.

Currently, ENSO reports $1.64, down 40.65% in 24 hours; BIO reports $0.02, down 7.39%; SNX reports $0.37, up 0.32%. Cryptocurrency assets remain highly sensitive to Fed policy expectations, with each personnel or policy signal potentially triggering market re-pricing.

Powell’s “unconventional” continuation is both a stabilizer and a variable. Global capital markets are waiting for the latest developments in Waller’s nomination, anticipating how this Fed power transition drama will unfold.