U.S. Supreme Court Rejects Trump Fed Intervention
Barrett noted that economists had filed briefs with the Court warning that such a move could trigger a recession.
Quick overview
- The U.S. Supreme Court raised concerns about Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook, emphasizing the importance of the Fed's independence.
- Justices warned that making it easier for presidents to dismiss monetary policymakers could undermine over a century of independent interest-rate decisions.
- Justice Brett Kavanaugh highlighted the potential dangers of allowing unchecked presidential power to remove Fed governors, suggesting it could lead to politically motivated dismissals.
- Trump's ongoing pressure on the Fed includes demands for aggressive interest rate cuts and allegations against Cook, which she claims are politically motivated.
The U.S. Supreme Court expressed serious concerns over Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook, warning that making such a move easier could severely undermine the central bank’s independence.
During oral arguments on Wednesday, the justices signaled that preserving the Federal Reserve’s independence in setting monetary policy is essential, and that eroding it would pose real-world economic risks. They suggested that the potential harm of the court’s ruling would lie in opening the door too widely for presidents—now or in the future—to dismiss monetary policymakers, effectively undoing more than a century of central bankers making interest-rate decisions free from political pressure.
That concern was most directly articulated by conservative Justice Brett Kavanaugh during an exchange with Solicitor General D. John Sauer, who argued that Trump should be allowed to fire Cook over alleged false statements made in mortgage applications prior to her appointment to the Fed.
“Your position that there is no judicial review, no process required, no remedy available—I mean, that would weaken, if not destroy, the independence of the Federal Reserve,” Kavanaugh told Sauer.
“We have to be mindful of what we are doing and the consequences of your position for the structure of government,” Kavanaugh added.
Making it too easy to remove a Federal Reserve governor, he warned, would give presidents an incentive to launch a “search-and-destroy mission” to “find something and just put it on a piece of paper—no judicial review, no process, nothing. It’s over.”
Trump’s continuing pressure
Trump has repeatedly demanded that the Fed cut interest rates faster and more aggressively than the central bank, under Chair Jerome Powell, has been willing to do amid persistent inflation. He has said he plans to appoint a like-minded Fed chair when Powell’s term expires in May.
Trump cited unproven allegations of mortgage fraud as justification for seeking Cook’s dismissal. Cook, who was appointed to the Fed’s Board of Governors in 2022 by former Democratic President Joe Biden and whose term runs until 2038, has described the allegations as a pretext to remove her over monetary policy differences.
Earlier this month, Trump’s Justice Department also launched a criminal investigation into Powell related to a project to renovate two historic buildings at the Fed’s headquarters in Washington. Powell similarly characterized the probe as a pretext for Trump to exert greater influence over the Fed and monetary policy.
Justice Amy Coney Barrett, who like Kavanaugh was appointed to the Supreme Court by Trump, pressed Sauer on the economic consequences of allowing Cook’s removal. Barrett noted that economists had filed briefs with the Court warning that such a move could trigger a recession.
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