A US appeals court has dealt a major blow to President Donald Trump’s bid to oust Federal Reserve Governor Lisa Cook, siding against the administration just ahead of this week’s pivotal Fed policy meeting.
The unusually direct attempt to remove a sitting Fed governor, a move not seen in the central bank’s 112-year history has stoked debate about the Fed’s independence and set up a constitutional tug-of-war between the White House and the nation’s most important economic institution.
Appeals court blocks Trump’s attempt
On Monday, the US Court of Appeals for the D.C. Circuit ruled 2-1 that Trump could not dismiss Lisa Cook “for cause” on the eve of the Fed’s highly anticipated rate-setting meeting.
Trump’s team had cited unproven allegations of mortgage fraud dating prior to Cook’s appointment, but Cook has strongly denied any wrongdoing and argued the firing attempt was politically motivated.
The appellate court found Cook likely to prevail on her due process claim, noting she received no meaningful notice or chance to rebut the allegations before her sudden dismissal letter, an omission that violates constitutional protections for federal officers.
The ruling preserves the status quo at the Fed, with Cook keeping her seat alongside Chair Jerome Powell and others as the central bank debates a crucial rate cut to support flagging labor markets.
The decision marks the first time any president has tried to fire a Federal Reserve governor since the institution’s creation in 1913 and amplifies scrutiny over Trump’s overall campaign to reshape independent economic agencies with loyalists.
Can Trump still challenge?
Legal experts expect Trump’s administration to ask the US Supreme Court to intervene, especially if it hopes to prevent Cook from participating in this week’s Fed meeting.
Absent a last-minute high court order, Cook appears likely to vote on crucial monetary policy decisions, including a possible rate cut that would affect markets worldwide.
Historically, the Supreme Court has allowed presidents to oust other independent agency appointees while cases proceed, but earlier this year drew a firmer line around the Fed’s unique independence and legal protections.
Even if Trump’s attorneys succeed in escalating quickly, the appeals court noted that any proper removal would have to comply with explicit due process: Cook must be formally notified of all allegations, given a hearing, and allowed to answer before any dismissal is finalized.
Meanwhile, her lawsuit challenging the legality of her firing attempt continues, with potential knock-on effects for the autonomy of not just the Fed but other US economic regulators.
Cook, for her part, remains defiant, publicly vowing not to “be bullied to step down” as she works to uphold the central bank’s independence.
As this legal standoff unfolds, the outcome could redraw long-standing boundaries on how US presidents interact with the nation’s most powerful economic policymaker, setting precedent for years to come.
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