Federal Court Halts Trump from Firing Fed Governor Cook
An US appeals court has determined that President Donald Trump may not dismiss Federal Reserve board member Lisa Cook from her role.
The split decision on Monday represents a setback to Trump, as it means Cook can stay in office for the upcoming Fed gathering on Tuesday and Wednesday, where the board are anticipated to cut US borrowing costs.
Trump declared in August that he was dismissing Cook, claiming she had committed financial misconduct. Cook denied the allegations and stated that the president had no power to remove her.
This legal battle has significant implications for the Fed's capacity to set interest rates free from interference from politicians.
Cook is a member of the governing body responsible for setting interest rates in the United States.
When Congress established the Fed in 1913, it incorporated safeguards to maintain its independence from politics. No US leader has ever removed a Fed governor.
The statutes invoked by Trump to justify his attempt to fire Cook had not been tested in a judicial setting. The Trump administration is likely to appeal Monday's decision to the Supreme Court.
Under the legislation that established the Fed, its board members may only be removed by a president with justification, though the law does not define the phrase nor establish procedures for removal.
Cook, a appointee of President Biden and the first black woman to hold office as a Fed board member, filed a lawsuit against Trump in August, arguing she was being fired due to her monetary policy stance.
The Fed has not cut interest rates so far this year as it works to control inflation, which have been fueled in part by the impact of Trump's trade taxes on foreign products.
Trump has repeatedly demanded aggressive rate cuts and has criticized Fed Chair Jerome Powell over his handling of monetary policy.
A rate cut is anticipated this week, though, in an effort to boost a slow US job market.
On Monday, Trump reiterated his demand for a major interest rate cut, writing on his Truth Social platform that Fed Chair Jerome Powell "needs to cut interest rates, now, and bigger than he planned."
