Supreme Court Will Decide if Fed Independence Has Any Legal Teeth By Vicky Ge Huang
The Supreme Court will hear arguments Wednesday over whether President Trump can fire Federal Reserve governor Lisa Cook-a case about far more than one official’s job. On the Fed’s monetary stance, Fed Gov. Michelle Bowman said at a conference Friday that given fragility in the labor market, it is too soon for policymakers to signal that interest rates are on hold. Vice Chair Philip Jefferson said separately that the Fed’s current policy stance on interest rates leaves it well positioned to determine the extent and timing of additional rate adjustments based on incoming data. On the trade front, President Trump threatened to impose tariffs on countries that oppose his efforts to take control of Greenland. This tariff threat isn’t like the others, writes Greg Ip for The Wall Street Journal.
Top News Supreme Court Will Decide if Fed Independence Has Any Legal Teeth
No president had attempted to remove a Federal Reserve governor in the central bank’s 112-year history until Trump tried to fire Lisa Cook last August over unproven mortgage-fraud allegations. The case will ultimately determine
whether the legal protections Congress created 90 years ago to insulate the central bank from political pressure have any meaning or whether a president can remake the Fed’s board at will. Every living former Fed chair has urged the court to side with Cook.
Trump to Hassett: I Want to Keep You Where You Are
Speaking at a healthcare event at the White House on Friday, Trump praised a recent television appearance
by National Economic Council Director Kevin Hassett, a top contender for Federal Reserve chair, who was seated in the front row. “I actually want to keep you where you are if you want to know the truth,” Trump said.
Fed’s Bowman: Rates Have More Room to Fall
Speaking at an economics conference in suburban Boston, Federal Reserve governor Michelle Bowman said that even after three quarter-point rate cuts in late 2025, the Fed’s interest-rate setting is still “moderately restrictive,”
meaning that Fed policy is still leaning against inflation and economic growth.
Fed’s Jefferson: Fed Is Well Positioned to Determine Rate Adjustments
Speaking at a conference in Boca Raton, Fla., Friday, Federal Reserve Vice Chair Philip Jefferson said he supported the committee’s decisions to reduce rates last year , as the Fed navigates its challenge of an easing labor market with inflation above its 2% target.
This Trade War Would Be Unlike Any Other
In the past year, President Trump has used tariffs extensively to pursue trade and investment deals, or address domestic complaints like illegal immigration and drugs. His threat to hit several European countries with tariffs of 10%, rising to 25%, if they oppose the U.S. annexation of Greenland is entirely different , writes Greg Ip for The Wall Street Journal. It would be an unprecedented use of tariffs against an ally for a strategic, as opposed to a domestic, goal.
Trump Threatens to Hit Countries That Oppose His Greenland Takeover With Tariffs
Trump Wants Greenland. Markets Don’t Know What to Make of That.
Market Reaction to Greenland Tensions Has Been Muted, BOE’s Bailey Says
What a Break With Europe Means for the American Economy
Europe Contends With a Big New Threat: The U.S.
U.S. Economy The 2025 Inflation Numbers Are Finally In. Here’s the Good and Bad News.
Overall inflation decelerated over the course of 2025 , from 2.9% in December 2024 to 2.7% last month. Core inflation, a measure that excludes the more volatile food and energy prices, fell even more steeply, from 3.2% to 2.6%. But a slower rate of overall price increases isn’t a decrease. And consumers remain frustrated that they haven’t seen more relief.
Economists Shrug Off Trumponomics, Boost 2026 Growth Outlook Back Above 2%
Economists have learned to stop worrying about Trumponomics. After President Trump announced his “Liberation Day” import tariffs in April, a group of economists regularly surveyed by The Wall Street Journal slashed their forecasts for economic growth
in 2025 from over 2% to a measly 0.8%, measured from the fourth quarter of the prior year.
Key Developments Around the World China’s Benchmark Lending Rates Left Unchanged
China’s benchmark lending rates were left unchanged after the central bank cut rates on its structural monetary policy tools to support economic growth. The one-year loan prime rate was steady at 3.0% and the five-year rate was kept the same at 3.5%, the People’s Bank of China said Tuesday. The hold of benchmark rates came one day after lower rates on the PBOC’s relending and rediscount facilities took effect. The facilities are typically used to encourage bank lending to high-tech, agricultural and small businesses. All these structural policy tools were lowered by 0.25 percentage point. (Dow Jones Newswires)
Chinese Policymakers Look Focused on Domestic Demand to Lift Economy
Japan’s Long-Term Bond Yields Surge as Looming Election Triggers Fiscal Worries
Japan’s long-term government bond yields surged to multi-year highs
Tuesday, spurred by fears that an upcoming election could lead to a consumption-tax rate cut that might worsen the country’s public finances.
New Zealand’s Economic Rebound Widens as Services Surge
Evidence of a solid recovery in New Zealand’s economy continues to mount with services sector activity rising strongly in December, snapping a 21-month downturn. The BNZ-BusinessNZ performance of services index for December was 51.5, up 4.3 points from November, but still below the average of 52.8 over the history of the survey. (DJN))
Eurozone Finance Ministers Back Croatia’s Vujcic as Next ECB Vice President
Eurozone finance ministers on Monday nominated Croatia’s Boris Vujcic
as the next vice president of the European Central Bank, the first step in an overhaul of the executive board as President Christine Lagarde prepares to step down next year.
German Financial Sentiment Rises as Industrial Sector Turns a Corner
German confidence in the economy jumped this month
after the country’s key industrial sector picked up toward the end of last year.
U.K. Unemployment Remains Near Pandemic-Era Highs
U.K. unemployment was unchanged in the three months through November, remaining close to pandemic-era highs
and adding to concerns about the economy’s health.
Canada Inflation Accelerates to 2.4% in December
Inflation in Canada quickened in the final month of last year , pressured by a tough year-ago comparison, though underlying measures indicate price pressures are easing.
A growing share of Canadian firms expect to reduce their payrolls this year in response to trade-policy uncertainty and soft demand, according to a quarterly survey released by the Bank of Canada. Meanwhile, firms report a slight improvement in the sales outlook, after one-third of respondents indicated a decline in sales volume over the past 12 months. Inflation expectations remain anchored within the Bank of Canada’s 1%-to-3% target range, with the share of firms expecting “significant” increases in their input and selling prices falling to some of the lowest levels in a decade. (DJN) Financial Regulation NYSE to Launch 24/7 Trading Platform for Blockchain-Based Securities
The New York Stock Exchange said Monday that it was developing a platform for trading tokenized securities , putting the heft of the 233-year-old exchange behind Wall Street’s growing embrace of the technology behind bitcoin.
Forward Guidance Tuesday (all times ET)
11:30 a.m.: Federal Reserve Board of Governors closed meeting
10 a.m.: Construction Spending – Construction Put in Place
10 a.m.: Pending Home Sales Index
10 a.m.: U.S. Supreme Court hears arguments on attempt to remove Federal Reserve Governor Lisa Cook
Research Trump Decision on Fed Chair Could Come Next Week, Bessent Says
President Trump could make a decision on the next chair of the Federal Reserve as soon as next week, Treasury Secretary Scott Bessent says. Embattled incumbent Jerome Powell’s term as America’s top central banker ends in May, with a shortlist of potential candidates emerging to replace him, including BlackRock executive Rick Rieder, Fed governor Christopher Waller and White House economic adviser Kevin Hassett. “The president will reach a decision as soon as next week,” Bessent tells CNBC on the sidelines of the World Economic Forum at Davos, Switzerland. -Joshua Kirby
Warsh Could Be a Bond Market-Friendly Choice as Next Fed Chair
Kevin Warsh is emerging as a potential likely candidate for Federal Reserve Chair and if he is chosen this could support the bond market, Julius Baer’s Dario Messi says in a note. Warsh would probably endorse additional interest-rate cuts but without being unduly influenced by political pressure to do so, the head of fixed income says. Warsh is perceived as being less politically aligned or ideologically tied to the administration’s demands and his nomination should therefore bolster the Fed’s credibility, he says. “Such a profile may help stabilise the term premium and reduce the risk of yield spikes linked to concerns over political influence.” The bond market still doesn’t appear to be pricing in material threats to Fed independence, Messi says. -Emese Bartha
Impact of Additional U.S. Tariffs on Inflation Likely Muted, ECB’s Villeroy Says
