A major development in Trump’s feud with the Fed is expected to occur next week before the Supreme Court.

As the Justice Department continues its investigation into the Federal Reserve, the next front in the central bank’s quest to maintain its political independence moves to the Supreme Court.

On January 21, the high court will hear arguments related to President Donald Trump’s effort to fire Federal Reserve Governor Lisa Cook.

Last year, administration officials accused Cook of committing mortgage fraud by misrepresenting which property was his primary residence on mortgage applications. Trump has tried to remove Cook from his post, but so far the courts have prevented him from doing so. If the White House wins the lawsuit, it could set an important precedent for the president’s current attempt to oust Fed Chairman Jerome Powell.

“If the Court rules against Cook, it would significantly increase the likelihood that Powell could also be removed from office based on the Justice Department’s investigation,” Aditya Bhave, an economist at Bank of America, said in a note. “We argue that the Cook case is more important to the policy trajectory than the identity of the next Fed chair. We think that’s even more true now.”

The stakes were raised in the Fed saga when Powell announced Sunday that he had been subpoenaed by the Justice Department over a controversial multimillion-dollar renovation project at the central bank’s headquarters in Washington. The investigation would focus on whether Powell lied about the project during his congressional testimony last year.

Trump has been a vocal critic of Powell and last year toyed with the idea of ​​firing him. Powell insisted Trump couldn’t impeach him, but if the president could establish the cause, that could change.

On the surface, the effort to remove Powell appears academic: His term as president expires in May and Trump is then free to nominate a new nominee. However, Powell’s term on the Board of Governors runs through 2028, meaning he could stay and be an obstacle to Trump’s efforts to get the Fed to cut rates “SIGNIFICANTLY!!! “, as he declared on Tuesday in a post on social networks.

However, it could also incentivize Powell to serve out his term on the board, as a bulwark against Trump’s efforts to thwart the Fed’s independence from political manipulation.

For his part, Powell has mostly resisted commenting on Trump’s criticism, which has been intensely personal and at times biting. While other presidents have tried to force the Fed to ease policy, Trump is the only one who has been public and aggressive. Additionally, this is the first time the Justice Department has gone after a sitting Fed chairman.

The circumstances could give rise to a prolonged battle in which Powell decides to stay, several analysts believe.

Deutsche Bank drew parallels between Powell and former Fed Chairman Marriner Eccles – whose name is now on a Fed building – who decided to remain governor after President Harry Truman removed him in 1948. Eccles remained governor until 1951 and was vocal in favor of the central bank’s independence.

Additionally, a revolt within the Federal Open Market Committee, which sets the Fed’s interest rates, could even see Powell retained as chairman, although Trump could appoint a separate chairman to run the central bank itself.

“While this was never a base case, and while it seemed a relatively remote possibility, this weekend’s events likely increase the likelihood that Powell could choose to stay at the Fed,” Matthew Luzzetti, Deutsche Bank’s chief U.S. economist, said in a client note. “Indeed, if the administration insists on criminally prosecuting Chairman Powell and Senate Republicans stand firm in not nominating nominees to the Federal Reserve Board, it is likely that the FOMC would choose Powell to remain chairman.”

This brings us back to Cook’s hearing.

If Trump wins, he could use it as justification to impeach Powell. If Cook wins, it would set off a long battle of wills between the Fed and the White House that could have significant political implications.

Markets are watching for clues about the Fed’s decisions, with traders betting heavily against any action at the policy meeting scheduled for later this month. Instead, they predict the next reduction won’t come until June, according to CME Group data.

The Cook decision “will carry immense weight when it comes to any president’s ability to shape the structure of the Fed,” wrote Kevin Gordon, head of macroeconomic research and strategy at Charles Schwab. “Make no mistake, though: Even though the magnitude of individual market movements in response to Powell’s news has been limited, the direction (dollar fall, stocks fall, bonds fall) is indicative of how these shocks must be digested if they persist over the long term.”