Original | Odaily Planet Daily (@OdailyChina)
Author | Golem (@web3_golem)
Trump is now truly facing both internal and external troubles: externally entangled in an ongoing struggle with Iran, and internally engaged in an intensifying "palace intrigue" with Federal Reserve Chairman Jerome Powell.
The two have long been at odds. Powell has repeatedly failed to follow Trump's wishes for interest rate cuts, and Trump has repeatedly stated his intention to fire Powell. Originally, if Trump could just endure a little longer, this problem would resolve itself: Powell's term as Fed Chair expires on May 15, 2026. Although he could remain on the Board of Governors until 2028, as long as Trump's favored Kevin Warsh took over, the new chair would hold the power, and an era of compliant rate cuts seemed imminent.
However, an unexpected twist has occurred. Monitoring by Odaily Seer Channel shows that the probability of Powell stepping down as Fed Chair after his term expires has dropped to 2% on Polymarket, indicating that Powell is very likely to continue serving as interim Fed Chair after May 15.
As early as March 19, Powell stated that if his successor is not confirmed before his term ends (May 15), he will continue to serve as Fed Chair. He further indicated that he would not leave the Fed Board of Governors as long as the Justice Department's investigation into him remains ongoing (Odaily Note: This investigation concerns whether Powell lied to Congress about the Fed's $2.5 billion building renovation project).
Therefore, whether Trump can get rid of Powell depends crucially on whether the Senate approves Kevin Warsh as the successor. Although prediction markets have priced in the outcome, the real answer will not be revealed until April 21 (next Tuesday).
Key Juncture: Whether Warsh's Fed Nomination Can Secure Senate Confirmation on April 21
Kevin Warsh is Trump's nominee for the next Fed Chair, but his eventual appointment is subject to review by the US Senate, which has the power to reject the nomination. Warsh will first appear at a hearing before the Senate Banking Committee on April 21, and the market is concerned that Warsh might not even pass the committee's confirmation.
The central figure obstructing Warsh's appointment is Thom Tillis, a Republican from North Carolina and a member of the Banking Committee. His reason is that the Justice Department's investigation into Powell is not yet concluded; he has publicly stated that he will block Warsh nomination from proceeding to a full Senate vote until the Justice Department ends its investigation. Thom Tillis has this influence because, although Republicans hold a 13-11 majority on the Senate Banking Committee, if Thom Tillis votes against it, Warsh's nomination could stall.
The Justice Department's investigation into Powell dates back to July 2025, when Trump visited the Fed building renovation site and publicly questioned its budget合理性. Consequently, in January 2026, the Justice Department formally launched an investigation into Powell regarding the cost of the Fed building renovation. This investigation was originally a political maneuver by Trump aimed at tarnishing Powell's public image and increasing pressure on the Fed.
Perhaps Trump didn't anticipate the backlash. However, Trump also does not intend to terminate the investigation into Powell to clear the path for Warsh's appointment. In an April 15 interview with Fox Business, he stated that while Thom Tillis's opposition would delay Warsh's confirmation, he did not plan to end the investigation, bluntly asking, "Don't you think we need to find out what happened there?"
Stepping back, even without this investigative hurdle, Warsh might struggle to secure the 51 Senate votes needed for confirmation. Under the current geopolitical and economic conditions, Warsh is likely to face questions about Fed independence and interest rate policy during his hearing. If energy and commodity bottlenecks persist due to war, the Fed's focus should be on whether to raise rates, not cut them.
This forces Warsh to choose his stance: either consistently support Trump, which would lower his confirmation chances, or defend the Fed's current wait-and-see stance, thereby angering the President.
Regardless of Warsh's choice, the window is narrow: The hearing is scheduled for April 21, meaning the Senate has only 24 days left before Powell's term ends to confirm Warsh's nomination and hold a vote; of these 24 days, the Senate is only scheduled to be in session for 13 days.
The Trump-Powell Stalemate
Therefore, based on this analysis, if Warsh encounters obstacles at the April 21 hearing, Powell is highly likely to continue serving as interim Fed Chair after his term expires on May 15, continuing to oppose Trump.
There is precedent for an incumbent chair continuing to lead the Fed as "interim chair" due to the successor's confirmation process being incomplete. For example, during President Clinton's administration, then-Fed Chair Alan Greenspan continued to lead the Fed for over three months as interim chair after his term expired while his successor's confirmation was pending; Powell himself served as interim chair for about three months in 2022 while awaiting Senate confirmation for his second term.
This mechanism also has a basis in US law. The Federal Reserve Act, the law governing the Fed, states that members of the Board of Governors shall continue to serve until their successors are appointed.
Faced with this situation, Trump is not willing to sit idly by. In his April 15 Fox Business interview, he stated that if Powell does not step down on time, he will fire him, and also will not abandon the investigation into him.
However, this might also be just an empty threat. Because Trump has not revealed what strategy he would use to fire Powell. Some conservatives believe Trump has the right to appoint one of his own nominated Fed governors—for example, Mester, Bowman, or Waller—to act in Warsh's stead before his confirmation, rather than having Powell do so, citing a memo drafted during the Carter administration which suggests the President can designate an acting chair if his nominee is not confirmed in time.
But the Fed's attitude towards this memo is unknown. Furthermore, this memo ultimately cannot serve as legal basis, so Trump appointing someone other than Powell as interim chair basically lacks legal foundation.
If Trump tries to fire Powell through normal procedures, the success rate is also low. US law states that Trump does not need Congressional confirmation to fire Powell, but he also cannot fire him directly without reason; it must be "for cause," meaning there must be legal grounds, not simply policy disagreements. Whether the reason for dismissal is justified would ultimately be decided by the courts.
Under the current circumstances, the only justifiable reason Trump has for firing Powell would be if Powell lied or was corrupt regarding the Fed's $2.5 billion building renovation project. But according to a March 25 report by The Washington Post, a senior aide to US Justice Department official Jeannie Rhee admitted during a closed-door hearing this month that the Justice Department, in its criminal investigation into Fed Chair Powell regarding the renovation costs, has not found evidence of any wrongdoing.
In other words, the investigation into Powell has not made substantial progress. Therefore, if Trump were to actually fire Powell, the latter would certainly appeal and challenge the dismissal, and with insufficient evidence, the court ruling would most likely side with Powell.
However, for capital market investors, a delay in Warsh's appointment and Powell retaining control of the Fed for several more months is not necessarily good news. Compared to Powell, who consistently preaches "patience," the market clearly prefers Warsh, who, upon taking office, might signal more rate cuts. Additionally, Warsh's own demonstrated crypto-friendly stance could more easily bring new imagination space to the crypto market.
