Here's an interesting wrinkle in the Trump-versus-Powell saga: the question isn't just whether Jerome Powell gets pushed out as Fed chairman, which everyone's been talking about. It's whether Trump will try to remove him from the Federal Reserve board of governors entirely.
Prediction markets on Kalshi are pricing in a 63% probability that Trump attempts to boot Powell from the board before the end of the year. Powell's term as Fed chair wraps up in May, but here's the thing—he's still got two years left as a board governor after that. Traders give it 41% odds that Trump makes a move before May 15, 2026.
DOJ Investigation Raises Stakes
This speculation heated up after news broke about a criminal investigation into Powell by the Department of Justice. Trump's allies and Republican officials are sounding alarms about what a public brawl between the White House and the Fed could do to markets. Their concern? Interest rates could climb and market stability could take a hit.
Sen. Thom Tillis (R-N.C.) has already drawn a line in the sand, saying he'll oppose any Fed nominee Trump puts forward until the legal situation gets sorted out. Given the narrow split on the Senate Banking Committee, that's enough to block a nominee from reaching a full Senate vote.
The Fed's Defensive Maneuver
Meanwhile, the Fed pulled off something unusual in December. The central bank reappointed all 12 regional Reserve Bank presidents and first vice presidents months ahead of schedule. The leadership of the Fed's operating arm also got early confirmation for new five-year terms starting March 1, 2026.
The timing raised eyebrows. Economist Justin Wolfers called the unanimous vote a deliberate strategy to shield the Fed from political interference—essentially "Trump-proofing" the institution before things got messy.
