monetarypolicy

In 2026, financial markets are watching not just the level of interest rates, but the potential shift in the U.S. monetary regime. The Federal Reserve is entering a period of political and institutional tension that could shape the trajectory of liquidity for years to come.
Chair Jerome Powell completes his term in May 2026. Formally, he could remain on the Board of Governors until 2028, but political pressure around his leadership has intensified. The debate centers on the pace of rate cuts, inflation control, and the growing cost of servicing U.S. government debt.
President Donald Trump has nominated Kevin Warsh as the next Chair. Warsh is widely perceived as more market-oriented and potentially more open to faster monetary easing. However, the critical point is this: the Fed Chair does not have unilateral power.
Monetary decisions are made by the FOMC — the Federal Open Market Committee. It consists of 12 voting members: seven governors and five regional Federal Reserve Bank presidents. Decisions are made by majority vote. That means even if a new Chair strongly favors rapid rate cuts, he will still need to secure the votes.
Several current governors remain in place with diverse policy perspectives. Christopher Waller has at times shown flexibility and openness to easing if inflation continues to moderate. Michelle Bowman has historically taken a more cautious, financial-stability-focused approach. Lisa Cook is generally viewed as balanced, emphasizing both employment and inflation mandates. In addition, regional Fed presidents often display more hawkish rhetoric, further complicating consensus-building.
As a result, the FOMC could be divided. Without a stable majority, policy shifts may occur gradually rather than abruptly. For markets, this creates an additional layer of uncertainty: even if the Chair’s rhetoric turns dovish, actual policy will depend on vote dynamics.
At the same time, a broader structural issue looms — the rising U.S. national debt and the growing interest burden. Higher rates increase the cost of debt servicing, strengthening political incentives for easing. Monetary policy is therefore becoming increasingly intertwined with fiscal realities.
For the Treasury market, several scenarios emerge. If a majority within the FOMC aligns behind faster easing, yields could decline and bond prices rise. The long end of the curve would likely benefit, the dollar could weaken, and financial conditions would loosen. If the Committee remains cautious or divided, yields may stay elevated, sustaining the relative attractiveness of Treasuries versus risk assets.
For crypto markets, the implications are even more nuanced. Crypto is sensitive to three core variables: real rates, system-wide liquidity, and confidence in the monetary framework. If real rates fall and liquidity expands under a sustained easing cycle, crypto typically benefits from a classic risk-on impulse, with ETF inflows accelerating and volatility shifting into an expansionary phase.
If real rates remain elevated due to a divided Committee, capital may gravitate toward the dollar and government bonds, putting pressure on digital assets. In that case, Treasuries compete directly with crypto for capital allocation.
A separate scenario involves political turbulence. If markets begin to question the independence of the Federal Reserve or the stability of its institutional framework, some investors may view $BTC as a hedge against systemic risk. Others, however, may rotate into short-duration bonds or cash, amplifying volatility across asset classes.
The central question of 2026 is not simply who chairs the Federal Reserve, but whether that Chair can build a stable majority within the FOMC. It is not “who leads,” but “who has the votes” that will determine the direction of monetary policy.
And if 2026 truly marks a regime shift, the first signal will not be a press conference — it will be the vote count inside the FOMC.
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Gold is back in focus after pushing higher again following a few quiet weeks. After topping out near $5,600, many thought the move was done. Instead, buyers stepped back in, and the rebound has reopened a bigger question: what’s actually driving this strength?
According to market commentator Ran Neuner, this rally has little to do with inflation headlines, interest rates, or short-term macro noise. His view points to something deeper — a slow-moving monetary shift happening behind the scenes.
China’s role is central to this story. Recent data shows Chinese holdings of U.S. Treasuries have dropped to levels not seen since 2008. At the same time, gold accumulation has continued steadily for over a year without pause. That contrast matters.
This isn’t about short-term economics — it’s about trust.
Neuner frames the situation as a battle over monetary credibility. Reserve currencies rely on confidence, and that confidence weakens when debt and money creation keep expanding. Gold stands apart because its supply can’t be adjusted by policy decisions. That fixed nature gives it renewed importance when faith in fiat systems starts to erode.
Central banks buying gold at record pace supports this idea. When governments look to stabilize reserves, they don’t chase speculation — they look for assets with long-term credibility. That kind of coordinated demand creates structural support, not just temporary price spikes.
This shift also lines up with broader market signals. The U.S. dollar has weakened noticeably over the same period, and commodities have strengthened alongside gold. Together, these moves suggest a gradual rebalancing rather than a sudden reaction.
Ray Dalio has warned before that heavy debt cycles eventually pressure dominant monetary systems. Neuner connects that warning to what’s unfolding now: diversification away from dollar-heavy reserves and toward assets outside the traditional credit system.
Gold’s recovery after the recent pullback shows buyers still view dips as opportunities within this larger framework. As long as reserve diversification continues and currency confidence keeps shifting, gold strength may remain a feature — not a fluke.
This isn’t a call.
It’s a signal to pay attention.
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