Prediction markets are signaling that Federal Reserve Chair Jerome Powell is unlikely to be removed early, despite a federal criminal investigation into the Fed’s $2.5 billion headquarters renovation.
Polymarket shows just an 8% chance that Powell will step down as Fed chair by March 31, a probability that barely moved even after Powell accused the administration of using the probe to pressure monetary policy. Another Polymarket contract assigns a 67% probability that Powell will leave the Fed Board by late May, indicating his influence could persist even after leaving the chair role. Kalshi contracts reflect a similar view, with only a 19% chance priced for Powell exiting before May 2026—up sharply on the day but still considered a low-probability scenario.
Traditional markets largely mirror this cautious outlook. Cryptocurrencies remained mostly flat, with bitcoin around $91,400 and ether holding above $3,100, signaling that traders are not anticipating immediate changes in U.S. monetary policy. Safe-haven assets were more active: gold climbed above $4,580 an ounce and silver gained over 4.5%, reflecting either their higher volatility relative to crypto or anticipation of continued loose policy under a potential new Fed chair.
Prediction market participants are favoring Kevin Warsh as a likely successor, giving him a 43% chance according to Polymarket. In Wall Street Journal op-eds, Warsh has argued that inflation stems from excessive government spending and an overextended central bank, advocating for a smaller, less politicized Fed, a reduced balance sheet, and a renewed focus on price stability.
Market snapshot:
- Bitcoin (BTC): Trading near $91,400, largely ignoring political uncertainty at the Fed.
- Ethereum (ETH): Around $3,125 after pulling back from its 100-day moving average, with momentum suggesting potential short-term recovery if key support holds.
- Gold: Up more than 1% to roughly $4,573, extending gains after mixed U.S. jobs data reinforced expectations for Fed rate cuts amid slower growth, persistent inflation, and a weaker dollar.
- Nikkei 225: Closed for a public holiday, keeping Japanese investors on the sidelines while broader Asia-Pacific markets tracked Wall Street’s record gains.
