Investing.com -- Yardeni Research told investors in a note on Monday that the Federal Reserve could fracture or align around incoming leadership depending on how the U.S.–Iran conflict unfolds.

The firm outlined “three economic scenarios ahead that could divide or unite the Powell and Warsh factions on the FOMC,” framing the outlook around President Donald Trump’s nominee for Fed chair, Kevin Warsh, and current chair Jerome Powell.

According to Yardeni Research, Warsh “will lean toward dovish policy-making” under pressure from the White House, though the timing of his confirmation remains uncertain.

Powell has said he will remain “chair pro-tem” until Warsh is confirmed, a setup the firm says could complicate consensus-building if Powell continues on the Board.

The firm’s first scenario, known as “Roaring 2020s resumed”, assumes a short war and a quick return to strong productivity-led growth.

In that environment, both policymakers could support easing, but Warsh “might push for a bigger rate cut” while Powell would remain data-dependent.

A second “no landing” scenario envisions resilient growth and stubborn inflation. Here, Powell and most of the FOMC “would not advocate for a cut,” while Warsh could face pressure to ease and “find himself a dissenter.”

The third scenario, a “stagflating 1970s redux,” involves a prolonged conflict and simultaneous inflation and weakness. Yardeni Research expects both policymakers to favor easing, though Warsh would “advocate for more aggressive rate cuts,” again risking dissent.

Across all cases, the firm says the path of the war will determine whether the Fed has a more unified stance or whether there are splits along increasingly visible lines.