Supreme Court Draws Line to Protect Central Bank Independence From Presidential Interference

WASHINGTON – The U.S. Supreme Court signaled Wednesday it would protect the Federal Reserve’s independence, appearing skeptical of President Donald Trump’s efforts to fire Fed Governor Lisa Cook.

During oral arguments, the justices seemed inclined to allow Cook to remain in her position. The court is weighing whether the president has the authority to remove central bank governors at will.

While the court has allowed the president to fire the heads of other independent agencies over the past year, the justices distinguished the Fed as a uniquely structured entity. Justice Brett Kavanaugh, a Trump appointee, said that allowing the president to fire Cook would "undermine, if not destroy, the independence of the Central Bank."

Last year, the court cleared the way for Trump to remove members of the National Labor Relations Board and the Merit Systems Protection Board. However, the justices have so far excluded the Fed from those precedents.

Some legal experts have criticized this distinction, calling the court’s reasoning "legal hocus pocus" and arguing it lacks a solid historical or legal foundation.

Despite these criticisms, government lawyers acknowledged a "longstanding tradition" of conducting monetary policy independently of executive influence.

The U.S. Supreme Court finds itself navigating a legal predicament of its own design. In recent years, the court’s conservative majority has aggressively championed the "unitary executive theory," a doctrine that grants the president sweeping authority over the executive branch. This logic has already been used to affirm President Trump’s power to remove leaders of various independent agencies, with the justices arguing that such unelected officials held excessive, unaccountable power. However, when confronted with the Federal Reserve, that ideological momentum appears to be stalling.

Legal scholars note that this sudden hesitation lacks a clear constitutional or structural foundation. Characterizing the Fed as "historically distinct" without providing a rigorous legal justification offers a tenuous defense at best. The court’s reluctance is likely rooted in economic pragmatism rather than jurisprudence. The conservative wing, traditionally aligned with market interests, recognizes that the politicization of monetary policy would be catastrophic. If a president could fire Fed governors over disagreements regarding interest rates, global confidence in the U.S. dollar and the broader economy would likely evaporate, risking runaway inflation and systemic financial instability.

Consequently, the court seems poised to carve out an exception for the Federal Reserve, prioritizing economic stability over ideological consistency. By shielding the central bank, the justices are tacitly acknowledging a necessary limit to executive overreach: central bank independence remains a red line that even the most robust interpretation of presidential power cannot cross.

The independence of the Federal Reserve plays a vital role in the economic stability of the Vietnamese-American community. The Fed’s decisions on interest rates directly dictate the cost of capital for small businesses—the backbone of our community—ranging from local phở restaurants to the tens of thousands of Vietnamese-owned nail salons across the country. By operating free from political pressure, the Fed can focus on curbing inflation and fostering steady growth, providing the predictable environment necessary for long-term financial planning. Any erosion of this autonomy could lead to heightened volatility, making it increasingly difficult for entrepreneurs in hubs like Little Saigon to secure loans, manage investments, or sustain business growth.