U.S. drops Powell probe, smoothing path for Warsh to lead Fed

U.S. authorities have dropped their investigation into former Federal Reserve Chair Jerome Powell, removing a potential obstacle to Kevin Warsh assuming a leadership role at the Fed. The resolution of the probe clarifies the succession outlook, reducing governance uncertainty that had weighed on perceptions of Fed continuity and policy stability. This development supports a smoother transition in monetary leadership, which markets interpret as conducive to consistent policy signaling and reduced political friction. The clarity on Fed leadership strengthens the dollar and Treasury market confidence, as investors anticipate a more predictable stance on rate policy amid shifting economic conditions. Traders will watch the upcoming FOMC meeting minutes for signals on Warsh’s policy leanings and potential shifts in forward guidance.

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