Federal Reserve Chair Jerome Powell will attend the Supreme Court's oral argument on Wednesday regarding President Trump's attempt to fire Fed Governor Lisa Cook, marking an unprecedented show of support by the central bank chair.

The Supreme Court is examining whether Trump can remove Cook from her position, following his announcement in late August that he would fire her. This represents an unprecedented attempt to remove one of the seven members of the Fed's governing board.

Powell's Public Support

Powell's decision to attend the Wednesday session represents a significant departure from his previous approach. According to sources familiar with the matter, this marks a much more public show of support than the Fed chair has previously demonstrated for Cook.

The attendance follows Powell's announcement that the Trump administration has sent subpoenas to the Fed, threatening an unprecedented criminal indictment of the Fed Chair. Powell, who was appointed to his position by Trump in 2018, appears to be shifting from last year's more subdued response to Trump's attacks on the central bank toward a more public confrontation.

Key Details of the Case

Interest Rate Dispute

Powell issued a video statement on January 11th condemning the subpoenas as "pretexts" for Trump's efforts to force sharp cuts to the Fed's key interest rate. Powell oversaw three rate cuts late last year, lowering the rate to approximately 3.60%. However, Trump has argued the rate should be as low as 1.00%, a position few economists support.

Legal Proceedings and Implications

The Trump administration has accused Cook of mortgage fraud, allegations that Cook has denied. No charges have been filed against her. Cook has sued to retain her position, and the Supreme Court issued a brief order on October 1st allowing her to remain on the board while they consider her case.

If Trump succeeds in removing Cook, he could appoint another person to fill her position. This would give his appointees a majority on the Fed's board, potentially providing greater influence over the central bank's decisions regarding interest rates and bank regulation.

Kenneth Rogoff, Professor of Economics at Harvard University, issued a stark warning at Davos 2026 about the unprecedented strain on US institutional credibility, particularly regarding Federal Reserve independence under President Trump's administration. Speaking at the World Economic Forum, Rogoff described the mounting pressure on the central bank as "banana republic stuff," drawing parallels with emerging markets where political interference in monetary policy has historically resulted in economic instability.\n\n## Political Pressure on Federal Reserve Independence\n\nRogoff emphasized that both ends of the US political spectrum harbor discomfort with an independent central bank, albeit for different reasons. While progressives have sought to expand the Fed's mandate into areas like social justice, inequality, and climate goals, Trump seeks direct control over monetary policy for political purposes.\n\n"Fed independence has worked very well, but it's fragile," Rogoff stated, adding that the ongoing Department of Justice scrutiny of the Federal Reserve should not be viewed as an isolated incident. He characterized the investigation as part of a broader strategy to intimidate Fed governors and provoke resignations.\n\n| Key Concerns: | Details |\n| ---: | :--- |\n| Target: | Not just Jerome Powell, but all Fed governors |\n| Strategy: | Intimidation through DOJ investigations |\n| Objective: | Reshape voting dynamics within the central bank |\n| Comparison: | Similar to emerging market institutional weakness |\n\n## Inflation Risks and Economic Trade-offs\n\nDespite his strong criticism, Rogoff stopped short of predicting runaway inflation under Trump's policies. Instead, he described the risk as a "slow crawl" higher in prices—a cost Trump may be willing to accept in exchange for political advantage.\n\n"I don't think inflation is going to go through the roof," Rogoff explained. "But it's a big mistake. Trump understands the risk, but in his mind it's a reasonable one if it helps him win the midterms."\n\nThe economist argued that lower interest rates in the near term could provide a temporary economic boost, even while creating longer-term inflationary pressures. He suggested that Trump views potential inflation as an acceptable trade-off for maintaining political control and winning future elections.\n\n## Tariffs as Permanent Policy Tool\n\nRogoff predicted that tariffs would remain a central pillar of US economic policy, regardless of potential Supreme Court rulings on their legality. He framed Trump's tariff strategy as primarily a foreign policy maneuver rather than a purely economic policy.\n\n"There's no question tariffs are here to stay," Rogoff stated. Even a strong court ruling against Trump would not fundamentally change this outcome, he argued, because the president has alternative avenues to impose trade barriers.\n\n| Policy Aspect: | Analysis |\n| ---: | :--- |\n| Permanence: | Tariffs will remain regardless of court rulings |\n| Primary Purpose: | Foreign policy tool, not economic policy |\n| Legal Strategy: | Linking tariffs to national security concerns |\n| Supreme Court Argument: | Tariffs essential for presidential foreign policy authority |\n\nBy connecting tariffs to national security—particularly through his push to acquire Greenland—Trump is strengthening the argument that trade tools fall within presidential authority. Rogoff noted that this Greenland maneuver serves a dual purpose: territorial ambition and legal strategy directed at the Supreme Court.\n\n## European Reaction and Global Implications\n\nRogoff observed unprecedented European concern at Davos 2026, describing their reaction to Trump's Greenland ambitions as "hysterical." He noted that in 25 years of attending Davos, he had never witnessed such intense European upset, comparing it to reactions following Putin's invasion of Ukraine.\n\nThe economist's warning from Davos was clear: while economic data may appear stable, the deeper risk lies in the politicization of institutions that underpin global financial stability. As Trump continues to dominate the global agenda, the critical question for markets extends beyond his next announcements to how much institutional credibility the global economy can afford to lose.\n\nSource: https://www.cnbctv18.com/world/davos-2026-trump-tariffs-fed-credibility-warning-kenneth-rogoff-19823851.htm