The race to influence monetary policy in Washington is no longer confined to the Federal Reserve. With Jerome Powell refusing to step down before his term ends in May 2026, attention has turned to the likely successor and the stage is already crowded. At least three contenders are making public overtures, adjusting their tone and prescriptions in ways that suggest they are less concerned with consistency and more focused on favour.
Dr Komal Sri-Kumar, president of Sri-Kumar Global Strategies, writes in his weekly newsletter Srikonomics that “Powell could remain a thorn in the administration’s side”, continuing to shape internal Board debates and speak out for central bank independence even after his chairmanship ends. That doesn’t sit well with President Trump, who has made it clear he wants a more pliant Chair before the 2026 midterms.
Two names keep reappearing: Kevin Warsh and Kevin Hassett. Both are familiar to Washington’s financial circles, both are publicly campaigning, and both are adapting fast to the political mood. Warsh, once a monetary hawk who warned in 2009 that the Fed should pull back on easing even as unemployment surged, now blames today’s central bank for throttling growth. “Bad supervision policies, bad monetary policies, and a very confusing set of standards,” he said last week, in what Sri-Kumar described as “a remarkable about-face.”
Warsh’s pivot could boost his standing with Trump, who has always valued loyalty and narrative over consistency. Hassett, meanwhile, was once a defender of central bank autonomy. These days, he’s criticising Powell and the FOMC for letting partisan leanings colour their decisions. The timing of this change, Sri-Kumar suggests, is unlikely to be coincidental.
Even Scott Bessent, the Treasury Secretary, has changed his stance. He had once drawn a clear line between short-term rate policy and longer-term yield management. Lately, he has echoed Trump’s criticisms and accused the Fed of being irrationally cautious about tariff-led inflation. On Fox News, he labelled the institution’s concerns “tariff derangement syndrome”.
Sri-Kumar argues this convergence is about power, not principle. “The answer likely lies in President Trump’s own public comments,” he notes. The President has been vocal about his desire to see someone in the top Fed job who will fall in line, lower rates, and if necessary, adopt unconventional tools to stimulate growth.
The consequences could ripple well beyond the FOMC meeting room. If the market begins to price in a more compliant, pro-growth Chair, short-term rates may come under pressure. But investors may also lose confidence in the Fed’s credibility, especially if they believe it is surrendering to political demands. That, Sri-Kumar warns, could push long-term yields higher and steepen the curve—not due to improving economic expectations, but because of rising inflation fears and diminished trust in monetary policy.
A single-day widening of the 2/10 Treasury spread by five basis points—equivalent to a 9.6% move—may not be a blip. “It may have been just the start,” he writes.
What began as a debate about rates has morphed into something broader: the credibility of institutions, the independence of central banks, and the price of political ambition. For bond markets, this means volatility, uncertainty, and the slow unspooling of yield curve logic.
The quotes in this article are sourced from Dr Komal Sri-Kumar’s weekly newsletter
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