"Who will be the next Fed chair?" Bank of Korea on alert… "A source of monetary-policy uncertainty"

The Bank of Korea (BOK) said that uncertainty over the next Federal Reserve (Fed) chair nomination timetable is likely to persist, citing continued uncertainty surrounding the monetary-policy path. The central bank appears to be assessing that the direction of monetary policy could shift depending on whom President Donald Trump chooses to lead the Fed.

On the 29th, the BOK held a market conditions review meeting related to the US Federal Open Market Committee (FOMC) and flagged the timing of the next Fed chair nomination as a source of uncertainty. The Fed left its policy rate unchanged at an annualized 3.50–3.75% at the FOMC meeting. Fed Chair Jerome Powell struck a neutral tone, saying, "We will decide on rates going forward based on the data."

Yoo Sang-dae, the BOK’s Senior Deputy Governor, said, "(After the FOMC) markets were generally stable, but given the content of Chair Powell’s press conference and the timetable for nominating the next Fed chair, uncertainty over the path of US monetary policy will persist." He added, "With domestic and external sources of instability still present—including uncertainty over future US tariff policy, concerns about fiscal soundness in major economies, and geopolitical risks—we will remain vigilant and continue to closely monitor market conditions."

The BOK’s identification of the 'nomination of the next Fed chair' as a monetary-policy uncertainty factor comes as President Trump has been pressing for rate cuts. If a Trump-aligned figure is appointed, rate cuts larger than the market expects could be implemented, potentially roiling the bond market and others. In that case, Korea’s monetary policy and the exchange rate could also be affected.

President Trump’s shortlist for Fed chair is reportedly down to four finalists: former Fed Governor Kevin Warsh; Kevin Hassett, director of the National Economic Council (NEC); Fed Governor Christopher Waller; and Rick Rieder, BlackRock’s global fixed-income chief investment officer (CIO).

While Warsh had been cited as the frontrunner through mid-month, Rieder has recently been gaining traction. According to the US online prediction market Polymarket, Rieder had the highest probability of being nominated, at 34%.

Warsh, who posted odds in the 60% range last week, has since fallen to 30%. Analysts attribute the decline to increased focus on the view that, as a former Fed official, Warsh could be hawkish (favoring tighter monetary policy).

Waller (19%) and Hassett (8%) are seen as less likely nominees. Hassett had initially been mentioned as a strong contender, but his odds dropped sharply after President Trump said, "To be honest, I want to keep him in his current job," adding, "I don’t want to lose him."

President Trump’s nomination of the next Fed chair is expected soon. US Treasury Secretary Scott Bessent said in an interview with CNBC on the 28th (local time) that he discussed the nomination of the next Fed chair with President Trump on the flight back to Washington, DC after a trip to Iowa.

Secretary Bessent said, "I don’t make recommendations. I only present the president with options and their consequences. The decision is the president’s." He added that the president is "choosing from four excellent candidates." Asked when the successor might be announced, he said, "Only the president knows."

A senior BOK official said, "Depending on who becomes Fed chair, the direction and intensity of US monetary policy will be determined," adding, "This inevitably affects the BOK’s market assessments and monetary-policy decisions as well." The official added, "We are watching with interest to see who the next chair will be."

Reporter Kang Jin-kyu josep@hankyung.com