The case that the market is focused on has been ruled! The U.S. Supreme Court: Trump has the right to fire government officials, but not the Federal Reserve

As concerns about the independence of the Federal Reserve rise in the market, the U.S. Supreme Court has clearly defined the boundaries of presidential power: Trump has the authority to dismiss certain heads of government agencies, but this decision does not involve the Federal Reserve.

According to media reports, the U.S. Supreme Court ruled 7-2 on Thursday, allowing Trump to dismiss the heads of the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB).

At the same time, the ruling protects the Federal Reserve from Trump's ability to dismiss senior officials, with the court specifically noting that the Federal Reserve is a "structurally unique quasi-private entity."

The majority opinion of the court stated that the president can dismiss officials exercising executive power, but there are limited exceptions. This decision is likely to enhance Trump's ability to dismiss officials from other agencies, including the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC).

The Federal Reserve as an Exception, Powell's "Firing Crisis" Temporarily Averted

The Federal Reserve being an "exception" in this ruling is likely to quell market fears regarding Trump's potential dismissal of Federal Reserve Chairman Powell.

Last month, Trump sent mixed signals: on April 17, he tweeted that "dismissing Powell is urgent," but five days later, he told reporters that "there are no plans to fire him."

Powell himself has repeatedly insisted that firing him would be illegal and stated in April that he did not believe the Supreme Court's ruling in the NLRB and MSPB cases would apply to the Federal Reserve. In a November press conference, Powell stated that if the president asked him to resign, he would not leave, as he believes there is no legal requirement for such a demand.

It is noteworthy that the Federal Reserve and its independence have bipartisan support. Despite being a public critic of Powell, Democratic Senator Elizabeth Warren warned that if Chairman Powell could be dismissed by the U.S. president, it would lead to a market crash.

Media reports indicate that Trump's criticism of the Federal Reserve for not lowering interest rates and his threats to dismiss Powell triggered panic in the financial markets last month, exacerbating bond sell-offs. The market only began to calm down after Trump insisted he did not intend to fire the Federal Reserve chairman.

Powell's term will last until May 2026, and he has repeatedly stated his intention to complete his term. However, while this ruling temporarily protects the Federal Reserve, it is likely to strengthen Trump's ability to restructure other regulatory agencies