Powell Calls Cook Case Crucial for Fed's Independence
By John Nada·Jan 28, 2026·3 min read
Powell highlights the Cook Supreme Court case as a pivotal moment for the Fed's independence, raising concerns about political interference in monetary policy.
Jerome Powell, Chair of the US Federal Reserve, described the ongoing Supreme Court case involving Fed Governor Lisa Cook as potentially the most significant in the central bank's 113-year history. During a press conference following a Federal Open Market Committee meeting, he emphasized the implications this case could have on the Fed's independence, stating, "That case is perhaps the most important legal case in the Fed's 113-year history." Powell's attendance at the oral arguments was met with controversy, especially after Treasury Secretary Scott Bessent labeled it a "mistake" for politicizing the matter.
The case revolves around whether President Donald Trump can dismiss Cook, who has been accused of mortgage fraud—a claim she denies. Powell noted that Supreme Court justices expressed skepticism about Trump's authority to remove Cook, raising alarms about the precedent such an action could set for the Fed’s autonomy. Critics have suggested that Trump's motivations may be linked to his desire for lower interest rates. Meanwhile, the Supreme Court allowed Cook to stay in her role while the case is considered.
Powell’s decision to attend follows revelations of a federal investigation into the renovations of the Fed's headquarters. This scrutiny coincides with Trump's ongoing criticism of Powell for not lowering interest rates swiftly enough, further intertwining politics with monetary policy. Powell articulated concerns that both the investigation into his actions and the potential removal of Cook threaten the Fed's apolitical stance, which is essential for maintaining its credibility in the long term.
He asserted, "The point of independence is not to protect policymakers or anything like that. It just is that every advanced economy (and) democracy in the world has come around to this common practice." Powell warned that losing this separation would make it difficult to restore the institution's credibility. As he faces uncertainty regarding a potential successor—Trump could announce a replacement for Powell at any moment—the chair advised his successor to steer clear of political entanglements, stating, "Don't get pulled into elected politics. Don't do it."
This situation underscores a pivotal moment for the Federal Reserve, as its independence faces unprecedented challenges. The outcome of the Cook case could redefine the relationship between the Fed and the executive branch, affecting how monetary policy is shaped in the future. Investors and market watchers should pay close attention to these developments, as they hold significant implications for the central bank's operations and its perceived autonomy.
In conclusion, the tension surrounding the Fed's independence raises critical questions about the future of US monetary policy in a politically charged environment. If the Supreme Court sides with Trump, it could set a troubling precedent that undermines the separation of powers crucial for the Fed’s credibility and effectiveness.