Opinion: Federal Reserve's new Chair Powell may not be the hawkish figure the market expects

GateUser-6433627c · 2026-02-12T12:50:17+00:00

Evercore ISI's Krishna Guhar believes that Kevin Walsh's hawkish inflation stance is exaggerated. He is a pragmatic conservative who can adapt flexibly to supply and demand-driven inflation. He supports the Federal Reserve reducing its balance sheet but is less inclined toward aggressive tightening policies. He expects the Fed to continue implementing consensus-driven policies amid a tense political environment.

GateUser-6433627c

2026-02-12 12:50:17

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On February 12, Krishna Guha of Evercore ISI stated that Kevin Warsh’s tough stance on inflation may have been overstated. Although his nomination initially pushed up yields and lowered gold prices, Warsh should be viewed more as a pragmatic conservative who can distinguish between supply-driven inflation and demand-driven inflation—this could make the Fed’s policy under his leadership more flexible. Warsh previously pointed out that artificial intelligence and productivity improvements are positive supply shocks, which could ease the pressure of tightening policies. He also supports the Fed reducing its balance sheet but is unlikely to pursue aggressive tightening policies that could disrupt markets. In a politically tense environment, it is expected that the Fed will continue to implement consensus-driven policies despite facing unusual pressures.

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