Former Federal Reserve Vice Chair Lael Brainard said the move to criminally investigate Fed Chair Jerome Powell was a "spectacular misstep" by the Trump administration has set off alarm bells in markets and in Congress. Brainard also discussed future of fed independence as the Supreme Court heard arguments in the case of the firing of Fed governor Lisa Cook. Brainard said that the case is crucial to maintaining a 'fundamental bedrock of the American economic dynamism.'
US Supreme Court justices suggested they are wary of President Donald Trump’s effort to fire Federal Reserve Governor Lisa...
Questions asked in this interview
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0:00Did you think it was appropriate for Jay Powell to be in attendance?
Look, I don't know whether it's appropriate or not, but I do know Treasury Secretary Bessant showed up when there were debates over tariffs. And could anything be more important to the Federal Reserve chair right now than how the Supreme Court delineates the president's authority on for-cause firing of board members?
Yeah, well, look, this is obviously something that will not be resolved today. And we understand it could be months before we know. Lisa Cook did issue a statement following the arguments this morning and talked about the insulation that Congress has put together to insulate the Fed from political threats, holding it accountable for delivering on the mandate. For as long as I serve at the Federal Reserve, she writes, I will uphold the principle of political independence and service to the American people. We could be in a world where she has another three or four Fed meetings before this case is decided. Should she be in those meetings?
Well, look, I think what Justice Kavanaugh got to in his questioning is that if a governor can be fired without any hearing, without any due process, without any real establishment of for cause, it really fundamentally means that the American economy can be in for higher inflation, less credibility on the part of the central bank, because that is what central bank independence is so important for. So I do think this issue about making sure that the president's ability to fire for cause is carefully delineated is critical, because otherwise we will lose that fundamental bedrock of the American economic dynamism.
I want to get your take on the state of the economy. But as long as we're talking about this, you have the case involving Lisa Cook and you now have a criminal investigation into Chairman Jay Powell. What is it that the president is trying to do in reshaping the Fed, if nothing short of that?
Yeah, well, I think really the criminal investigation just seems like a spectacular misstep on his part. If anything, it has really raised concerns we've heard from financial market leaders. We have now heard from prominent Senate Republicans who sit on the Senate Banking Committee. The move to criminally investigate the chair for some renovations has really, I think, set off alarm bells, and that could lead to the chair staying in his seat as governor for longer than he might have done otherwise.
Isn't that something? We had Tim on the program last week who under no uncertain terms says he will not consider a replacement until this is resolved. As we spend time with Lael Brainard, I want to go through some of the notes that I took during the President's address today before this crowd in Davos that I think we can agree knows a lot about the data. They probably have a couple of Bloomberg terminals in that room. These are business leaders. These are world leaders who are listening to the president. Inflation has been defeated. Is that true?
Well, I think we know that inflation is still hovering close to 3%. We'll get the PCE inflation later, but inflation has not been defeated. Inflation close to 3% is not close to the Fed's target. There's more work to be done there.
The bold claim: virtually no inflation, he says. An extraordinarily high economic growth over the past three months. He says core inflation has been 1.6%. He is projecting economic growth in the fourth quarter of almost five and a half percent. Will that happen?
Seems very implausible. Don't forget we had the shutdown in the fourth quarter and that's likely to depress growth in the fourth quarter. Of course, we'll see a bounce back from that in the first quarter. He's right that we've had several quarters of very strong growth that has been entirely propelled by the private sector boom. But if you look at jobs, it's been entirely jobless growth. So the rate of job creation has really plummeted during this time. And of course, with inflation still high, that's why you see consumer sentiment that's still very glum.
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Brainard, L. (2026, January 21). Cook Supreme Court Case Could Challenge 'Fundamental Bedrock' of Economy, Says Brainard [Interview transcript]. Bloomberg Podcasts. CEOInterviews.AI. https://ceointerviews.ai/interview/667405/
MLA
Lael Brainard. "Cook Supreme Court Case Could Challenge 'Fundamental Bedrock' of Economy, Says Brainard." Bloomberg Podcasts, 21 Jan. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/667405/.
BibTeX
@misc{brainard2026_667405,
author = {Lael Brainard},
title = {Cook Supreme Court Case Could Challenge 'Fundamental Bedrock' of Economy, Says Brainard},
howpublished = {Interview transcript, Bloomberg Podcasts. CEOInterviews.AI},
year = {2026},
month = {jan},
url = {https://ceointerviews.ai/interview/667405/},
note = {Speaker-attributed transcript with timestamps}
}
