Under Pressure? Central Bank Independence Meets Blockchain Prediction Markets

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• VoxEU: Under Pressure? Central Bank Independence Meets Blockchain Prediction Markets 🔗

Abstract

Employing data from Polymarket, a blockchain-based prediction market where users trade on Federal Reserve rate decisions and scenarios related to central bank independence, we construct a hawk–dove score for wallets and link beliefs to monetary policy expectations. Users who believe President Trump will fire Fed Chair Powell, and who expect stronger political pressure on the central bank, hold more dovish views and expect lower short-term rates than other users. They also expect higher long-term Treasury yields and higher inflation, consistent with reduced policy credibility. The findings indicate that political events affect expectations through perceived threats to central bank independence.