Fed independence day, barely

Research evidence excerpt

Fed independence day, barely

J P M O R G A N North America Economic Research

29 June 2026

Today’s Supreme Court decision, allowing Fed Governor Cook to stay on in office Economic and Policy Research

while challenging her dismissal, removes one tail risk to the economic outlook. To Michael Feroli

be sure, that tail risk got thinner after oral arguments in January, when the tone of (1-212) 834-5523

the discussion made it appear more likely that Cook would prevail. Since the next michael.e.feroli@jpmorgan.com

governor whose term expires isn’t until early 2028 (Powell) it now looks like, JPMorgan Chase Bank NA

barring several unexpected early retirements, the risk of monetary policy

becoming excessively politicized has diminished further today.

Instead, the greater personnel risk to monetary policy independence in the long

term may reside not in the Federal Reserve Board but in the Supreme Court. The

case was decided on a 5-4 vote. Writing for the Court, Chief Justice Roberts

explained the historical rationale for carving out the Fed from the unitary executive

doctrine, which allows the president full discretion in staffing agencies that have

executive powers. As a quasi-private entity, central bank independence is built on

the traditions of the Bank of North America, and the First and Second Banks of the

United States. As Roberts points out, the first of these institutions even preceded

the Constitution.

However, at several points in this discussion, Roberts conflates central bank

independence with monetary policy independence. It is debatable whether these

predecessor institutions conducted some form of monetary policy. There is less

debate about whether they conducted anything resembling contemporary

monetary policy.