Federal Reserve Chairman Jerome Powell will attend an oral hearing at the U.S. Supreme Court in the case against Federal Reserve Board member Lisa Cook, according to a source who spoke to the Associated Press (AP).
Powell’s presence in the courtroom at Wednesday’s hearing is seen as a rare and noteworthy show of support from a central bank governor.
Supreme Court Examines Trump's Attempt to Remove Fed Board Member
The Supreme Court is examining whether President Donald Trump can remove Cook from his post, as he suggested at the end of August. Trump’s attempt to remove a member of the Federal Reserve’s seven-member board of governors is seen as an unprecedented move in modern times. According to a source close to the matter, Powell plans to personally attend this critical hearing.
Powell’s move represents a far more visible stance than his previous support for Cook. It also comes after it was revealed that the Trump administration had sent notices to the Fed and threatened an unprecedented criminal investigation against Powell. Powell, appointed Fed Chairman by Trump in 2018, is seen as abandoning his more cautious approach from last year and moving towards a more open confrontation with the administration.
Powell Criticizes Administration's Actions
In a video message released on January 11, Powell characterized the notices as “pretexts” by Trump to force the Fed to sharply cut policy interest rates. Powell had overseen three rate cuts late last year that brought the rate down to approximately 3.6 percent. Trump, however, argues that rates should be lowered to 1 percent; this view is not supported by the vast majority of economists.
Allegations Against Lisa Cook
The Trump administration accuses Cook of mortgage fraud. Cook denies these allegations, and there are no formal charges against him. Cook filed a lawsuit to retain his position, and on October 1st, the Supreme Court issued a temporary ruling allowing him to remain in office while the legal proceedings continued.
Potential Implications of Trump's Action
According to analysts, if Trump succeeds in removing Cook from his post, he will be able to appoint someone of his own choosing in his place. This could mean that Trump-appointed members would gain a majority on the Fed’s board of governors, increasing their influence over the central bank’s interest rate policy and banking regulations.