Federal Court Prevents Trump from Dismissing Lisa Cook
An federal judicial panel has determined that US President Donald Trump may not remove Federal Reserve governor Lisa Cook from her position.
The split ruling on Monday represents a blow to Trump, as it ensures Cook can stay in office for the upcoming Fed gathering on Tuesday and Wednesday, where officials are expected to lower US borrowing costs.
Trump declared in August that he was firing Cook, claiming she had engaged in mortgage fraud. Cook denied the claims and stated that the president had no authority to remove her.
This legal battle has significant ramifications for the Fed's capacity to set interest rates without political influence from elected officials.
Cook is a member of the board tasked with setting monetary policy in the United States.
When Congress created the Fed in 1913, it included provisions to maintain its autonomy from politics. No US leader has previously removed a Fed board member.
The statutes cited by Trump to justify his attempt to fire Cook had not been challenged in court. The Trump team is likely to challenge Monday's ruling to the highest court.
Under the law that created the Fed, its governors may only be removed by a president with justification, though the law does not define the term nor establish procedures for dismissal.
Cook, a appointee of President Biden and the first black woman to serve as a Fed governor, sued Trump in August, claiming she was being fired due to her economic views.
The Fed has not cut interest rates so far this year as it works to manage price increases, which have been fueled in part by the effects of Trump's trade taxes on foreign products.
Trump has consistently demanded aggressive rate cuts and has criticized Fed Chair Jerome Powell over his handling of interest rates.
A rate cut is anticipated this week, though, in an effort to stimulate a slow US job market.
On Monday, Trump reiterated his demand for a major interest rate cut, posting on his Truth Social platform that Fed Chair Jerome Powell "must cut interest rates, now, and bigger than he had in mind."
