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Federal prosecutors are investigating Jerome Powell over a $2.5 billion renovation of the Federal Reserve’s headquarters, but prediction markets suggest traders see little chance the probe will force the Fed chair out before his term ends.
As of Jan. 12, Polymarket traders assigned just an 8% probability to Powell stepping down by March 31, while broader crypto and traditional markets showed limited reaction to the political pressure mounting in Washington.
On Polymarket, traders initially priced just an 8% chance that Powell would step down as Federal Reserve chair by March 31.
That probability barely shifted even after Powell accused the administration of using the investigation as leverage over monetary policy, according to reporting cited in the Asia Morning Briefing.
A separate Polymarket contract put the odds at 67% that Powell leaves the Federal Reserve Board by late May, a reflection of his term timeline rather than a direct response to the Jerome Powell probe.
Kalshi, the regulated U.S. prediction market, reflects a similar dynamic. Contracts betting on whether Powell will be out as chair before May 2026 rose sharply on the day to around 19%, yet still suggested that traders view early removal as a low-probability outcome rather than a base case.
Together, these signals indicate that the Jerome Powell probe is not being treated by market participants as an imminent catalyst for leadership change at the central bank.
The restrained pricing also suggests that traders distinguish between political noise and institutional realities. Even if Powell were to step down as chair, his continued presence on the Fed Board—until his term expires—could preserve continuity in policy deliberations, muting the immediate impact of the Jerome Powell probe.
Beyond prediction markets, asset prices show limited signs of stress linked to the Jerome Powell probe. Crypto markets were largely unchanged during U.S. trading hours, with bitcoin hovering near $91,400 and ether holding above $3,100, according to CoinDesk market data.
The stability suggests that traders are not repositioning aggressively in anticipation of abrupt shifts in U.S. monetary policy.
Traditional safe havens, however, told a more nuanced story. Gold prices climbed above $4,580 an ounce, while silver gained more than 4.5%.
The move could reflect a continuation of recent volatility in metals markets, or a hedge against the possibility—however remote—that the Jerome Powell probe contributes to looser monetary policy under a future Fed chair.
Market participants appear divided on whether metals are reacting directly to political risk or to macroeconomic signals such as cooling growth, sticky inflation, and a weakening dollar.
Still, the divergence between metals and crypto underscores that the Jerome Powell probe is being absorbed differently across asset classes rather than triggering a uniform flight to safety.
While traders discount the likelihood of Powell’s early exit, prediction markets are actively pricing potential successors. Kevin Warsh, a former Federal Reserve governor, is the leading candidate, with a 43% probability of becoming the next Fed chair on Polymarket.
The interest reflects growing debate about the future direction of U.S. monetary policy in a post-Powell era, regardless of the outcome of the Jerome Powell probe.
In opinion pieces published by The Wall Street Journal, Warsh has outlined a sharply different vision for the central bank. He has argued that inflation was driven not by wars or tariffs but by fiscal excess and central bank overreach, calling for “a smaller, less political Fed,” — Kevin Warsh, former Federal Reserve Governor, Wall Street Journal.
He has also advocated “a sharply reduced balance sheet and a return to strict price stability as the core test of central bank independence,” — Kevin Warsh, former Federal Reserve Governor, Wall Street Journal.
Those views resonate with some market participants who believe the next phase of Fed leadership could bring a reset in policy priorities.
Still, prediction markets suggest that even as succession chatter intensifies, the Jerome Powell probe itself is unlikely to be the decisive factor in determining when or how leadership changes occur.
Analysts note that the Federal Reserve’s institutional independence and staggered leadership terms make abrupt change difficult, even under political pressure.
As a result, the Jerome Powell probe is being interpreted less as an immediate threat to Powell’s position and more as a backdrop to longer-term debates over accountability and governance at the central bank.
For now, traders appear to be betting that continuity will prevail. Crypto prices remain steady, prediction markets imply low odds of early removal, and even safe-haven moves stop short of signaling panic. In that sense, the Jerome Powell probe has become another data point for markets to digest rather than a turning point.
Unless new information materially alters the investigation or its political implications, the consensus view priced into markets is clear: the Jerome Powell probe may dominate headlines, but it is not yet rewriting expectations for U.S. monetary policy or Federal Reserve leadership.
