Original article by Odaily Odaily( @OdailyChina )
Author｜Golem ( @web3_golem )
Trump is now truly facing a mix of internal and external troubles: he is embroiled in a protracted conflict with Iran externally, while his internal power struggle with Federal Reserve Chairman Powell is intensifying.
The two had long disliked each other. Powell had repeatedly refused to lower interest rates as Trump wished, and Trump had repeatedly stated his intention to fire Powell. Originally, this problem could have easily disappeared if they had just been patient: Powell's term as Federal Reserve Chairman would expire on May 15, 2026. Although he could remain a member of the Board of Governors until 2028, if Trump's handpicked confidant Kevin Warsh took over, and the new chairman gained control, an era of compliant rate cuts seemed imminent.
However, an unexpected turn of events occurred. According to monitoring by Odaily Seer , the probability of Powell stepping down as Federal Reserve Chairman after his term expires has dropped to 2% on Polymarket, and Powell is likely to continue serving as interim Chairman of the Federal Reserve after May 15.
Back on March 19, Powell stated that he would continue to serve as Chairman of the Federal Reserve if his successor was not identified before the end of his term (May 15). He further stated that he would not leave the Federal Reserve Board of Governors as long as the Department of Justice's investigation into him was not concluded (Odaily note: the investigation involves whether Powell lied to Congress about the $2.5 billion renovation project of the Federal Reserve building) .
Therefore, whether Trump can oust Powell hinges on whether the Senate approves Kevin Warsh as his successor. Although the market has already priced in this, the real answer won't be revealed until April 21st (next Tuesday).
Key juncture: April 21st – Will Warsh's nomination to the Federal Reserve be confirmed by the Senate?
Kevin Warsh is Trump's nominee for the next Federal Reserve Chairman, but whether he will ultimately take office depends on the review of the U.S. Senate, which has the power to reject his nomination. Warsh will first appear before the Senate Banking Committee on April 21, and the market is concerned that he may not even be confirmed by the committee.
The key figure blocking Warsh's nomination is Thom Tillis, a Republican from North Carolina and a member of the Senate Banking Committee. His reasoning is that the Justice Department's investigation into Powell is not yet complete, and he has previously stated publicly that he will block Warsh's nomination from reaching a full Senate vote until the Justice Department concludes its investigation. Thom Tillis wields this influence because, although Republicans hold a 13-11 majority on the Senate Banking Committee, a single dissenting vote from Thom Tillis could stall Warsh's nomination.
The Justice Department's investigation into Powell dates back to July 2025, when Trump visited the Federal Reserve building renovation site and publicly questioned the reasonableness of its budget. Consequently, in January 2026, the Justice Department formally launched an investigation into Powell regarding the renovation costs of the Federal Reserve building. This investigation was originally a political maneuver by Trump, aimed at tarnishing Powell's public image and increasing pressure on the Federal Reserve.
Perhaps Trump didn't expect to face such a backlash. However, Trump doesn't intend to end the investigation into Powell just to clear obstacles for Warsh's nomination. In an interview with Fox Business on April 15, he stated that although Thom Tillis's opposition would delay Warsh's confirmation, he had no intention of ending the investigation, bluntly asking, "Don't you think we need to find out what happened there?"
Let's take a step back and consider this: even without this investigation, Warsh might struggle to secure the 51 Senate votes needed for confirmation. Given the current geopolitical and economic climate, Warsh would likely face questions about the Fed's independence and interest rate policy during his hearings. If energy and commodity bottlenecks persist due to war, the Fed's focus should be on raising interest rates, not lowering them.
This forces Warsh to choose his position: either continue to support Trump, but this would reduce the chances of his nomination being confirmed; or defend the Fed's current wait-and-see stance, but this would anger the president.
Regardless of Warsh's choice, the window of opportunity left for him is running out: the hearing is scheduled for April 21, which means that the Senate has only 24 days left to confirm Warsh's nomination and vote before Powell's term ends; and of those 24 days, the Senate is only scheduled to hold a meeting for 13 days.
The stalemate between Trump and Powell
Therefore, based on the above analysis, if Warsh is obstructed at the hearing on April 21, there is a very high probability that Powell will remain as the interim chairman of the Federal Reserve after his term expires on May 15, continuing to oppose Trump.
There are precedents for the current chairman to continue leading the Federal Reserve as "interim chairman" when a successor has not yet been confirmed. For example, during President Clinton's administration, then-Federal Reserve Chairman Alan Greenspan continued to lead the Fed as interim chairman for more than three months after his term expired because the process of confirming a successor had not been completed; Powell also served as interim chairman for about three months in 2022 while awaiting Senate confirmation for his second term.
This mechanism is also based on US law. The Federal Reserve Act, the law that regulates the Federal Reserve, stipulates that members of the Board of Governors can continue to serve until their successors are appointed.
Faced with this situation, Trump was unwilling to sit idly by. In an interview with Fox Business on April 15, he stated that if Powell did not resign on time, he would fire him and would not abandon the investigation into him.
However, this may only be a verbal threat . Since Trump has not yet revealed what strategy he will use to fire Powell, some conservatives believe that Trump has the right to appoint one of his own nominees for the Federal Reserve Board—such as Milan, Bowman, or Waller—to temporarily fill the position until Warsh is confirmed, instead of having Powell take over. This is based on a memorandum drafted during the Carter administration, which stated that if the president's nominee is not confirmed in time, the president can appoint an acting chairman.
However, the Federal Reserve's stance on this memorandum remains unknown. Furthermore, since the memorandum cannot serve as legal evidence, Trump's appointment of someone other than Powell as interim chairman has virtually no legal basis.
Even if Trump were to dismiss Powell through normal procedures, the chances of success would be slim. US law stipulates that Trump does not need congressional approval to dismiss Powell, but he also cannot dismiss him without cause; there must be a legal basis, meaning it cannot be simply due to policy disagreements. Ultimately, the court will determine whether the grounds for dismissal are legitimate.
Under the current circumstances, the only legitimate reason for Trump to fire Powell is that he lied or embezzled funds related to the $2.5 billion renovation project of the Federal Reserve building. However, according to a report in the Washington Post on March 25, a senior deputy to Justice Department official Jenny Piro admitted at a closed-door hearing this month that the Justice Department had no evidence of misconduct by Federal Reserve Chairman Powell in its criminal investigation into the costs of the Federal Reserve building renovation.
In other words, the investigation into Powell has not yet made substantial progress. Therefore, if Trump does fire Powell, the latter will certainly appeal, and given insufficient evidence, the court will most likely rule in Powell's favor.
However, for capital market investors, a delay in Warsh's appointment and a few more months of Powell's tenure at the Federal Reserve would not be good news. Compared to Powell, who consistently talks about "wait and see," the market clearly prefers Warsh, who is likely to signal more interest rate cuts after taking office. Furthermore, Warsh's pro-crypto stance makes it easier for the crypto market to gain new insights.
