Current Market Outlook

Prediction markets currently assign a very low probability to former President Donald Trump attempting to fire Federal Reserve Chair Jerome Powell by the January 31, 2026 deadline. On Polymarket, the "Yes" share trades at approximately 2¢, implying just a 2% chance. This price indicates the market views a direct firing attempt as highly improbable, though not entirely impossible given the political uncertainty.

Key Factors Driving the Odds

Two primary factors are suppressing the odds. First, legal precedent and institutional norms create a significant barrier. The Federal Reserve Act grants the President authority to remove a Fed Chair only "for cause," a high legal standard typically interpreted as malfeasance or neglect of duty, not policy disagreements. This norm has held for decades. Second, Trump's public criticism of Powell has historically focused on pressuring him to lower interest rates, not on removal. Market participants likely interpret this rhetoric as political theater aimed at influencing monetary policy rather than a genuine intent to trigger a complex and destabilizing constitutional crisis over central bank independence.

What Could Change These Odds

The odds could shift rapidly with a specific, unambiguous statement from Trump explicitly calling for Powell's dismissal or announcing an executive action to that effect. While the January 31 deadline is near, any major market turmoil or a severe recession blamed on Fed policy in the coming weeks could increase political pressure, making confrontational rhetoric more likely. However, the core constraint remains the established "for cause" removal process. A significant price move would require evidence that Trump is prepared to test this legal firewall directly, a scenario markets currently price as a tail risk.