The fate of Federal Reserve Governor Lisa Cook, whom President Donald Trump has attempted to oust in his bid for greater control over the central bank, is expected to be revealed during a US Supreme Court debate on Monday.
The dispute over Trump's attempt to remove Democrat Rebecca Kelly Slaughter from the Federal Trade Commission will precede his attempt to fire Cook on January 21.
The carveout that the Supreme Court appeared to establish for the Fed in May to shield central bank governors from being dismissed at the president's whim will be put to the test in these two cases.
In contrast to other independent organizations, the court described the Fed as a "uniquely structured, quasi-private entity." Even if the FTC action had no bearing on the Fed, it would still be a huge success.
A 1935 decision that permitted Congress to establish autonomous agencies and shield their leaders from presidential authority is being contested by the court's conservative supermajority.
Reversing that ruling would have an impact on the people Trump has attempted to remove from other government agencies that are in charge of employment discrimination, consumer product safety, labor relations, and transportation safety.
For the US and the rest of the world, the stakes are particularly high for the Fed, whose independence in determining interest rates is regarded as a long-standing pillar of prudent economic management.
Governors can determine monetary policy without fear of being dismissed by a president who disapproves since federal law prohibits their removal without "for cause." Trump expressed his desire to fire Cook due to claims of mortgage fraud, which she has refuted.
This year, Trump has become enraged with the central bank for taking too long to cut interest rates, and the president has hinted at removing Chair Jerome Powell.
Powell's tenure as chair expires in May, and Trump has stated that he will select a successor who supports lower rates. He is scheduled to unveil his decision early next year.
Trump has already appointed Stephen Miran, an ally who is advocating for quick rate cuts, to a vacancy on the board this year. Cook's tenure doesn't end until 2038, so removing him would give Trump another chance to change the composition of the Fed's board.
The Federal Open Market Committee's two-day meeting, which may result in a new rate cut, starts the day before the high court hearing.
