Supreme Court Faces Historic Test Over Federal Reserve Independence

The U.S. Supreme Court is reviewing a case that may impact the Federal Reserve's independence from political influence. The case involves President Trump's attempt to fire Fed Governor Lisa Cook. The court's decision could define the conditions under which a president can remove members of the central bank's governing body.

This week, the U.S. Supreme Court will hear a pivotal case concerning the independence of the Federal Reserve. At stake is whether the court will protect the central bank from political influence, as Congress initially intended, or if it will allow presidential discretion in dismissing Fed officials.

The case stems from former President Donald Trump's efforts to remove Fed Governor Lisa Cook over alleged mortgage fraud—a move that some say threatens the Fed's autonomy. Observers speculate that even if Cook retains her position, the court could outline the necessary 'cause' for removal, potentially simplifying future dismissals.

The Federal Reserve's credibility, built on resisting short-term political pressures, has helped stabilize inflation rates. Analysts fear that if policymakers can be dismissed at will, the institution's effectiveness in managing inflation could deteriorate, undermining its long-standing position as a force for economic stability.

(With inputs from agencies.)