WASHINGTON, May 22 (WSH) — The U.S. Supreme Court ruled Thursday that while the president may remove certain federal agency leaders, the Federal Reserve remains off-limits—delivering a significant reaffirmation of its institutional independence.
In a 7–2 decision, the Court authorized the dismissal of heads of agencies such as the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB), asserting that presidential authority applies to officials exercising executive power. However, it clearly excluded the Federal Reserve, calling it a “structurally unique quasi-private entity.”
The decision eases recent market anxieties fueled by President Donald Trump’s threats to dismiss Fed Chair Jerome Powell over interest rate disputes. Trump had tweeted in April that firing Powell was “urgent,” though he later softened his stance. Powell, whose term ends in May 2026, has repeatedly stated that such a dismissal would be legally invalid and that he would not resign if asked.
The ruling marks a major victory for those advocating for central bank independence, a principle traditionally upheld across party lines. Senator Elizabeth Warren, despite her critiques of Powell, warned that allowing a president to fire the Fed chair would “crash the markets.”
While the ruling protects the Fed, it expands presidential power to reshape other regulatory bodies, potentially enabling Trump to restructure agencies like the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) should he return to office.
With Powell’s position secure for now, attention turns to how this precedent may influence the executive branch’s future relationship with independent federal agencies.
