Federal Reserve & Monetary Policy

At oral arguments Wednesday, multiple Supreme Court justices appeared skeptical of the Trump administration’s claim that a president’s “for‑cause” decision to fire a Federal Reserve governor is wholly unreviewable, with several justices — including conservative Justice Brett Kavanaugh — warning such a rule would undercut 112 years of Fed independence and the Court signaling it is likely to keep Lisa Cook in her seat for now. The administration says it had “cause” based on alleged pre‑appointment mortgage misrepresentations Cook denies and for which she has not been charged; Fed Chair Jerome Powell (who will attend the arguments) and four former Fed chairs, Treasury secretaries and other economists filed warnings about the economic and credibility risks, while recent DOJ subpoenas relating to Powell have complicated the optics of the dispute.

House Democrats led by Rep. Jamie Raskin and Rep. Jared Moskowitz have formally asked Judiciary Chairman Jim Jordan to open a congressional inquiry into the Trump Justice Department’s criminal investigation of Federal Reserve Chair Jerome Powell, calling it a "sham" probe and a "systematic assault" on central‑bank independence. Their letter urges Jordan to hold public hearings and consider subpoenaing Attorney General Pam Bondi and other DOJ officials after Powell revealed Sunday that prosecutors were threatening indictment over his June 2025 Senate testimony on costly renovations of the Fed’s headquarters. The investigation is being run by U.S. Attorney Jeanine Pirro in Washington, who says Powell ignored repeated outreach about cost overruns and insists "indictment" has been raised only by Powell, not her office. Powell argues the real aim is to bully the Fed into cutting interest rates faster in line with President Trump’s public demands, while Trump denies ordering the probe but continues to attack Powell as "not very good" at the job. The clash has already rattled lawmakers in both parties, raising fresh alarms about politicization of the Justice Department and the erosion of the Fed’s traditional insulation from White House pressure at a time when it is still managing inflation and rate cuts.