Warsh's Fed Chair Odds Surge to 86% After Powell DOJ Inquiry Ends

Prediction market traders on Kalshi pushed Kevin Warsh’s chances of becoming Federal Reserve chair sharply higher after the Department of Justice ended its inquiry into Jerome Powell. The new pricing gives Warsh an 86% chance of Senate approval by May 15, up from approximately 30% before the DOJ decision on Monday morning, according to Kalshi contract data cited in the article.

Kalshi Market Reaction to DOJ Decision

Traders on Kalshi also give Warsh more than a 97% chance of confirmation by June 1. The massive jump in odds came immediately after one political roadblock disappeared. Before the Powell inquiry was dropped Monday morning, the same May 15 contract was sitting near 30%.

The Kalshi contracts changed fast because traders saw the DOJ decision as a direct boost for Warsh. The May 15 odds went from about 30% to 86%, while the June 1 odds climbed past 97%. That pricing now suggests bettors expect the Senate to act soon, unless the fight around Powell turns into a bigger battle over the Fed itself.

Political Context: Tillis Condition and Senate Roadblock

Senator Thom Tillis, a Republican from North Carolina, had made the end of the Powell case a condition for advancing the nomination. Tillis backed Warsh for the Fed chair job but said he would not vote to advance the nomination while the criminal inquiry into Powell was still alive.

Warsh, who was nominated by President Donald Trump to replace Powell, appeared before the Senate Banking Committee on Tuesday.

Ongoing Opposition from Democratic Senators

Senator Elizabeth Warren, a Massachusetts Democrat, said Friday that she did not think the Senate should go forward with Warsh’s confirmation yet.

The dropped inquiry did not end the political fight. Warren and Senator Dick Durbin, an Illinois Democrat, sent a letter to US Attorney Jeanine Pirro after Pirro announced that the DOJ was walking away from the case. They warned that the decision still left room for the investigation to return later.

In their letter, Warren and Durbin wrote: “Your announcement leaves the door wide open for you to relaunch the criminal probe against Chair Powell, or future baseless investigations into Powell or other Fed Governors and a future Fed Chair, should it once again become politically expedient for you to do so.”

Warren and Durbin also asked Pirro what would be needed to reopen the case, inquiring: “From your perspective, what are the types of ‘facts’ that would warrant reopening the investigation?” They also asked whether Trump or anyone else in his administration had been told about the decision to stop the inquiry, and requested more information about the DOJ’s referral to the Fed’s inspector general.

Powell’s Status and Trump Pressure

Powell may still remain at the Federal Reserve for a while, even if he does not complete the governor term that ends in January 2028. Trump has threatened to fire Powell if he does not leave on his own after his term as chair expires.

Powell first revealed the grand jury matter in January through a rare Sunday night video. He said: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

Powell also stated: “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.”

Federal Judge’s Ruling on DOJ Subpoenas

A federal judge later tossed out two DOJ subpoenas sent to the Fed, which badly damaged the criminal case. US District Judge James Boasberg wrote: “A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower rates or resigning.”

Boasberg also wrote that the government had “essentially zero evidence” to suspect Powell of a crime.

White House Response

The White House released a statement Friday after Pirro ended the inquiry. It said: “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the Office of the Inspector General’s more powerful authorities best position it to get to the bottom of the matter.”

The statement also said: “The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making.”

Powell is expected to face questions on Wednesday during his regular press conference after the FOMC meeting.