US Supreme Court to hear Trump bid to fire Fed governor

The US Supreme Court hears arguments on Wednesday over President Donald Trump’s attempt to fire a Federal Reserve governor, a case which could have far-reaching consequences for the independence of the central bank.

Trump sought in August to dismiss Fed governor Lisa Cook, a key official serving on the Fed’s interest rate-setting committee, accusing her of mortgage fraud. She denies the charges.

The conservative-dominated Supreme Court barred Trump from immediately removing Cook, allowing her to remain in her post until it could hear the case contesting her dismissal.

In a sign of the significance of the case and public support for Cook, Fed Chair Jerome Powell plans to personally attend Wednesday’s Supreme Court hearing, a source familiar with the matter told AFP.

Powell’s expected appearance comes as the Trump administration intensifies its pressure campaign targeting the central bank, including the opening of a criminal investigation into the Fed chief.

Earlier this month, Powell revealed that US prosecutors had launched an inquiry into him over an ongoing renovation of the Fed’s headquarters.

Powell has dismissed the investigation as a politically motivated attempt to influence the central bank’s interest rate setting, and the heads of major central banks have thrown their support behind him.

Trump’s bid to fire Cook, the first Black woman to serve on the central bank’s board of governors, and the probe into Powell are a dramatic escalation of the president’s efforts to control the Fed.

Trump has repeatedly criticized the Fed for spurning his demands to slash interest rates more aggressively.

By ousting Cook, the Republican president could potentially add another voice to the Fed’s board to try and shift interest rates in his favored direction.

The case’s outcome could also determine if legal protections for the Fed — against political pressure — hold up, or if the president can take aim at members of the Fed’s leadership.

Former Fed chiefs have recently warned that undermining central bank independence risks “highly negative consequences for inflation” and the functioning of economies.