The U.S. Supreme Court ruling defends the independence of the Federal Reserve! Powell temporarily maintains his seat on the board, Trump threatens "this is not over".

On Monday local time, the U.S. Supreme Court rejected the appeal of U.S. President Trump to dismiss Lisa Cook, a Federal Reserve board member. The decision is seen as a defense of the Fed's cherished independence in the face of unprecedented challenges, even though the Supreme Court did not make a ruling on whether Trump ultimately has the power to dismiss Cook or any other Fed members. By a 5-4 vote, the U.S. Supreme Court rejected the Trump administration's request to "stay the execution of a lower federal court ruling." Previous lower court rulings had prohibited the dismissal of Cook during the litigation process. Nearly nine months have passed since Trump first stated his intention to fire Cook, alleging mortgage fraud before she became a Fed board member and taking dismissal action based on this. But Cook and her supporters believe that Trump's real motive is her refusal to comply with the President's political pressure to lower interest rates. Trump's actions against Cook, as well as a criminal investigation initiated by his administration in January against then-Fed Chairman Powell and later withdrawn, collectively represent the greatest challenge to Fed independence since its founding. The profound impact of the Cook case lies in delineating the legal boundaries that insulate the Fed from short-term political demands - the market widely believes that the central bank's ability to shield itself from short-term political demands is a core prerequisite for stable inflation and economic regulation. Unsubstantiated Accusations Chief Justice John Roberts, a conservative who authored the decision, stated that Trump "failed to give Cook the procedural protections prescribed by law. Without these protections, she was unable to properly defend against the charges brought by the President." In August of last year, Trump attempted to dismiss Cook on the grounds of unsubstantiated mortgage fraud allegations. Cook denied the allegations and stated that it was just an excuse, the real purpose being differences in monetary policy. Roberts, along with fellow conservative Justice Brett Kavanaugh and three liberal justices, supported the ruling. Conservative Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, and Amy Coney Barrett dissented. The ruling clearly protects Fed officials from arbitrary dismissal by the President. Roberts reviewed the history of the Fed and its predecessors, including the Bank of North America, the First Bank of the United States, and the Second Bank of the United States, emphasizing that these institutions have always maintained independence from the President to protect monetary policy from political interference. Roberts wrote: "Like the directors of its three predecessor institutions, Fed board members do not serve at the pleasure of the President - they serve staggered 14-year terms and can only be removed for 'cause.'" He added, "We have no reason to leave the public in doubt, or to cast doubt on the status of one of our country's (and the world's) most important financial institutions." Furthermore, the U.S. Supreme Court stated that the ruling did not make a judgment on the factual disputes in the case. The case can now return to a lower court for further hearings, as related procedures were suspended due to the Supreme Court's involvement. Roberts wrote: "There is still at least one unresolved question, namely what actually happened here, whether Cook truly engaged in 'gross dereliction of duty,' let alone the 'false and possibly criminal behavior' alleged in the President's letter." He added that Cook must be able to respond to these allegations made against her. Federal Reserve Act In 1913, the U.S. Congress passed the Federal Reserve Act when establishing the Fed, which included provisions to protect the central bank from political interference, stating that the President can only dismiss Fed board members for "cause." However, the law does not define what constitutes "cause," nor does it specify the specific dismissal procedures. Although Monday's ruling did not specifically define the grounds on which Trump could dismiss Cook or other board members, Roberts indicated that, given the history and independence of the Fed, the threshold should be "fairly high." Roberts wrote: "Without such limits, any perceived or alleged mistake (past or present) could become an off-the-shelf excuse for removing a board member - a fact he can clearly recognize, which will inevitably affect his decisions on what opinions to voice and how to vote." "There is nothing more corrosive to the independence that Congress hopes to maintain." Federal Judge Chaya Cobt ruled in September of last year that Trump's attempt to dismiss Cook without prior notice or a hearing likely violated her due process rights under the Fifth Amendment of the U.S. Constitution. The judge also stated that the allegations made against Cook were likely not sufficient to constitute legitimate grounds for dismissal under the Federal Reserve Act, as they occurred before she became a Fed board member. Responses from Both Sides Cook welcomed the Supreme Court's ruling, stating that it confirms the Fed's obligation to independently make policy decisions without political interference. In a statement released after the ruling, Cook said: "The ruling affirms core principles that have supported sound economic governance for decades - all Fed policy decisions must be based on objective data and independent judgment, free from political interference. The Supreme Court upholding the lower court injunction and recognizing the necessity of complete statutory procedures and substantive cause underscores that the Fed's independence is the foundation for fulfilling Congress's two missions - stable prices and full employment." Cook also stated: "This was never about the mortgage documents I signed prior to becoming a Fed board member. This was about an invented excuse to try to remove me from office because I refused to yield to political pressure and continued to make interest rate policy decisions based on what is best for the American people." Meanwhile, Trump stated that the government will not stop due to the Supreme Court ruling. He wrote on social media: "The Supreme Court has merely referred the Cook lawsuit back to a lower court for reexamination based on mere procedural reasons. The core of the case is about whether Cook is qualified to serve as a Fed board member. This administration will take immediate legal action to ensure that an official engaged in unlawful behavior does not have the authority to make critical economic policies affecting the lives of all Americans." Bill Pulte, the key figure behind the push to dismiss Cook and the director of the Federal Housing Finance Agency, also responded to the ruling on social media. Pulte stated: "I have repeatedly stated that Lisa Cook will eventually face criminal prosecution for mortgage fraud." Another Significant Ruling Meanwhile, on the same day, the U.S. Supreme Court made another landmark ruling that expanded the President's power over government agencies. In a case involving Trump's dismissal of a Federal Trade Commission (FTC) commissioner, the Court expanded the President's authority to dismiss leaders of other U.S. federal agencies and overturned a precedent dating back to 1935. In a 6-3 decision, the Supreme Court supported Trump's dismissal of Democratic FTC commissioner Rebecca Slaughter. Trump called this ruling "one of the most important decisions regarding presidential power." The Court overturned the landmark "Humphrey's Executor v. United States" case, which had previously rejected Democratic President Franklin Roosevelt's dismissal of an FTC commissioner due to policy disagreements, recognizing Congress's authority to protect certain independent regulatory agency heads from arbitrary dismissal by the President. Monday's two rulings follow the Supreme Court's February 20 decision to overturn most of Trump's comprehensive global tariff measures in another economically significant case. While the Supreme Court supported Trump's ability to dismiss other heads of independent federal agencies, several justices expressed concerns during the Cook case trial debate about the President's right to dismiss Fed board members. In fact, the U.S. high court had sent a signal last year - in a May 2025 ruling, the court allowed Trump to dismiss two Democratic commissioners from the Federal Labor Relations Board, while specifically noting the unique structure and historical tradition of the Fed, making it distinct from other agencies.