US Supreme Court sees risk in Trump running roughshod over Fed

• Justice Kavanaugh warned that the administration's position of 'no judicial review, no process required' for removal could 'weaken, if not shatter, the independence of the Federal Reserve'
• Trump fired Cook (appointed by Biden in 2022 with a term until 2038) citing unproven mortgage fraud allegations, which Cook calls a pretext for their monetary policy disagreements over interest rate cuts
• Justice Barrett noted economists filed briefs warning Cook's removal could trigger a recession, pressing the administration on economic consequences while emphasizing judges shouldn't 'be in the business of predicting exactly what the market's going to do'

Summary: US Supreme Court Weighs Trump's Bid to Fire Fed Governor Lisa Cook

Key Facts

The U.S. Supreme Court heard arguments on January 21, 2026, regarding President Trump's attempt to fire Federal Reserve Governor Lisa Cook. Cook, appointed in 2022 by President Biden with a term extending to 2038, faces removal over alleged mortgage application misstatements, which she claims is a pretext for disagreement over monetary policy.

Main Parties and Issues

Key players: Fed Governor Lisa Cook, President Trump, Fed Chair Jerome Powell, and Supreme Court Justices Brett Kavanaugh and Amy Coney Barrett.

During oral arguments, conservative Justice Kavanaugh expressed concern that Trump's position—allowing removal with "no judicial review, no process required"—could "weaken, if not shatter, the independence of the Federal Reserve." Justice Barrett questioned the economic risks, noting economist briefs warning of potential recession.

Market Implications

The case threatens over a century of Federal Reserve independence from political pressure. Economists emphasize that central banks operating free from short-term political influence produce better long-term economic outcomes. Trump has been pressuring the Fed to cut interest rates more aggressively amid lingering inflation and has initiated a criminal investigation against Powell regarding Fed headquarters renovations—also viewed as a pretext for gaining monetary policy influence.

Trump plans to install a new Fed chair when Powell's term expires in May 2026.

Timeline and Outlook

A Supreme Court ruling is expected by end of June 2026, potentially sooner. The court is deciding whether to lift a lower court's order blocking Cook's immediate removal. Justice Sotomayor suggested allowing lower courts to fully examine all issues before final Supreme Court review to maintain public and global confidence in due process.