Economy January 28, 2026

Powell Calls Supreme Court Hearing on Move to Remove Governor Cook a Pivotal Moment for the Fed

Chair attended oral arguments, cites past precedent and reiterates impartial stewardship as economic signals show mixed improvement

By Avery Klein
Powell Calls Supreme Court Hearing on Move to Remove Governor Cook a Pivotal Moment for the Fed

Federal Reserve Chair Jerome Powell confirmed he attended Supreme Court arguments about President Trump’s attempt to remove Fed Governor Lisa Cook, calling the case "perhaps the most important legal case in the Fed’s 113-year history." At a news conference, Powell cited precedent for attending and emphasized his continued objectivity. On economic data, he said disruptions from a government shutdown are largely behind the Fed and described mixed signs in the labor market alongside a clearer improvement in the outlook for activity since the last meeting.

Key Points

  • Powell attended Supreme Court arguments over President Trump’s attempt to remove Fed Governor Lisa Cook, calling the case "perhaps the most important legal case in the Fed’s 113-year history." (Sectors affected: financials, government policy-sensitive markets)
  • He cited precedent for such attendance, referencing former Fed Chair Paul Volcker’s appearance at the Supreme Court in the 1980s, and said he would "continue to do job with objectivity and commitment to serve American people." (Sectors affected: regulatory and institutional governance)
  • On economic data, Powell said distortions from a government shutdown are "no longer material," and described data that show "some signs of labor market stabilization" alongside "some signs of continued cooling," while saying the outlook for activity has "clearly improved" since the Fed’s prior meeting. (Sectors affected: labor-intensive industries, interest-rate sensitive sectors, overall market sentiment)

Federal Reserve Chair Jerome Powell said Wednesday that he attended Supreme Court oral arguments related to President Donald Trump’s effort to remove Fed Governor Lisa Cook, and described the proceeding as "perhaps the most important legal case in the Fed’s 113-year history."

Speaking at a news conference, Powell explained his reasoning for attending the hearing, saying: "I thought it might be hard to explain why I didn’t attend it." He pointed to historical precedent for a Fed chair appearing at the high court, noting that former Fed Chair Paul Volcker showed up at the Supreme Court in the 1980s.

Powell also addressed his role and conduct going forward, offering a succinct pledge to the public: he will "continue to do job with objectivity and commitment to serve American people."


On economic matters, Powell provided a brief assessment of recent data and the effects of a government shutdown on statistical readings. He said the Fed is "working through data distortions from a government shutdown," adding that those distortions are "no longer material."

Regarding labor market conditions and broader activity, Powell characterized the data as showing a mixed picture. He said the numbers display "some signs of labor market stabilization" alongside "some signs of continued cooling." He further noted that, compared with the Fed’s prior meeting, the outlook for economic activity has "clearly improved."

The chair’s remarks combined an unusual public acknowledgment of participation in a Supreme Court proceeding with an update on the staff’s reading of recent economic inputs. Powell framed his attendance as defensible on precedent and transparency grounds while reiterating his institutional responsibilities and the Fed’s ongoing work to interpret data affected by temporary distortions.


The comments leave standing a set of high-profile issues for markets and policymakers: the legal challenge concerning a sitting governor of the central bank, the short-term effects of a government shutdown on economic statistics, and mixed signals from labor-market measures even as the near-term growth outlook appears to have strengthened since the Fed’s last policy meeting.

Risks

  • The high-profile legal case concerning the attempted removal of a Fed governor introduces uncertainty about institutional governance and could affect market perceptions of central bank independence - a risk for financial markets and policy-sensitive sectors.
  • Data distortions from a recent government shutdown have complicated the Fed’s economic readings; while Powell said these distortions are "no longer material," the prior disruption poses a risk to accurate near-term assessment of economic trends, affecting sectors that rely on timely labor and activity data.
  • Mixed signals in the labor market - with "some signs of stabilization" and "some signs of continued cooling" - create uncertainty for policymakers and markets, which may influence expectations for monetary policy and affect interest-rate sensitive sectors.

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