The recent investigation by the US Department of Justice into Federal Reserve Chairman Jerome Powell has led to unexpected shifts in market dynamics, particularly concerning Donald Trump's influence over the Fed. As the situation unfolds, Powell's prospects of remaining in his position beyond May are looking increasingly favorable, as the publication provides the following information:
Market Forecasts for Powell's Tenure
Market forecasts indicate a growing likelihood that Powell will continue to serve at the Federal Reserve until at least 2028, despite the ongoing scrutiny. This shift comes as Kevin Warsh, a candidate perceived as more hawkish, begins to gain traction against Kevin Hassett, who has been closely associated with Trump. The competition for the Fed chairmanship is intensifying, suggesting a potential power struggle that may persist throughout the year.
Decline in Probability of Powell's Departure
Data from the forecasting platform Polymarket reveals a significant decline in the probability of Powell leaving his post. Following his video response to a question on January 11, the likelihood of him departing before May 30 dropped from 74 percent to 45 percent. Additionally, the chances of Powell stepping down by the end of the year have also decreased, falling from 85 percent to 62 percent, indicating a shift in market sentiment regarding his tenure at the Fed.
In a significant development, President Trump announced his upcoming selection for the next chair of the Federal Reserve, a decision that could reshape monetary policy. This follows recent market shifts regarding Jerome Powell's tenure, highlighting the evolving dynamics within the Fed. For more details, see read more.
