Fed Keeps Rates Steady as Markets Bet on Powell’s Exit

The Federal Reserve left its target federal funds rate at 3.50%–3.75% Wednesday, marking a third consecutive meeting without a rate change. Chair Jerome Powell spoke to reporters after the Federal Open Market Committee decision. Before the announcement, the CME FedWatch tool showed a 100% probability of no change.

Financial markets have shifted their attention to the timing of any change in Fed leadership. On Kalshi, traders placed Powell’s chance of resigning from the Board of Governors at about 30% by June, rising to 66% by August and 81% by the end of the year. Those odds jumped to roughly 54.5% for a June departure immediately after the Department of Justice closed its inquiry and later moderated.

Polymarket traders assigned an 87% probability that Powell would step aside between May 15 and May 22. Betting-market probabilities moved in recent days, making the post-meeting press conference a focal point for investors.

Powell had told reporters after the March FOMC meeting that he would not step down as governor until the Justice Department finished its criminal inquiry into him. The department dropped that probe on Friday.

President Donald Trump’s nominee for Fed chair, Kevin Warsh, advanced through the Senate Banking Committee on Tuesday. If the full Senate confirms Warsh before the Fed’s next meeting in mid-June, he could become chair. Warsh has expressed support for the Fed’s independence.

If Powell remains chair, he would preside over policy meetings in June and late July. His term as a Fed governor runs through 2028, which would allow him to stay on the board even if he relinquishes the chair post.

Investors and officials are watching Powell’s remarks at the press conference and the Senate’s confirmation timetable for information about the Fed’s leadership and the schedule for upcoming policy meetings.