By Howard Schneider

CHICAGO (Reuters) – The legal case before the Supreme Court regarding President Donald Trump’s firing of two Democrats from federal labor boards likely does not apply to the Federal Reserve, said Fed Chair Jerome Powell at an event held by the Economic Club of Chicago.

Powell stated, “that’s a case that people are talking about a lot. I don’t think that that decision will apply to the Fed, but I don’t know. It’s a situation that we’re monitoring carefully.”

He emphasized the Fed’s independence is widely understood and supported in Washington and Congress, where it really matters.

Powell’s relationship with Trump has been tense; despite being appointed by Trump, Powell faced threats of dismissal for not adhering to political pressures regarding interest rates. He affirmed that the Fed’s decision-making will remain based solely on their analysis and data for the best outcomes for the American people, free from political influence.

His remarks garnered applause, particularly following submissions to the Supreme Court linking Trump’s firings to potential threats to the Fed’s independence.

Lawyers representing fired appointees argue that allowing these dismissals would jeopardize the independence of the Federal Reserve, which is critical for the economy. The Supreme Court recently permitted Trump’s dismissal of Harris and Wilcox temporarily, while deliberations on their reinstatement continue.

The Federal Reserve Act of 1913 designates that governors can only be dismissed for cause, protecting them from political or policy disagreements.