A federal appeals court has ruled that President Donald Trump cannot remove Federal Reserve Governor Lisa Cook from her position, delivering a major setback to the president.
The 2–1 ruling on Monday ensures that Cook will remain in office during the upcoming Federal Reserve policy meeting on Tuesday and Wednesday, where U.S. interest rates are expected to be lowered, according to BBC reports.
Trump’s Attempt to Dismiss Cook
In August, Trump announced he was firing Lisa Cook, alleging she had committed mortgage fraud. Cook denied the accusations and argued that the president has no authority to dismiss a Federal Reserve governor.
This case carries significant implications for the independence of the Federal Reserve and its ability to set interest rates free from political interference.
Legal Context and Historic Significance
Since its creation in 1913, the Federal Reserve Act has kept the central bank independent from politics. No U.S. president has ever dismissed a Federal Reserve governor.
By law, Fed governors can only be removed by the president “for cause”, though the statute neither defines the term nor outlines removal procedures. Trump’s legal team argued otherwise, but the ruling rejected this interpretation.
The Trump administration is expected to appeal the decision to the Supreme Court.
Lisa Cook’s Role and Lawsuit
Cook, appointed by President Biden and the first Black woman to serve as a Federal Reserve governor, sued Trump in August, claiming she was being targeted for her monetary policy stance.
The Fed has resisted cutting rates so far in 2025, aiming to keep inflation under control, despite rising consumer prices partly driven by Trump’s tariffs on imported goods.
Trump Pushes for Aggressive Rate Cuts
Trump has long pressured the Federal Reserve to adopt aggressive rate cuts and frequently criticized Fed Chair Jerome Powell.
On Monday, Trump renewed his calls on Truth Social, writing that Powell “must cut interest rates now, and more than he originally planned.”
A rate cut is widely expected this week to stimulate a slowing U.S. labor market.
