Federal Court Blocks Trump’s Bid to Fire Fed Governor Lisa Cook, Upholding Central Bank’s Independence

A federal court on Tuesday delivered a significant setback to former President Donald Trump’s attempts to exert greater control over the Federal Reserve, ruling that Governor Lisa Cook can remain in her position while she fights his efforts to remove her. U.S. District Judge Jia Cobb granted Cook’s request for a preliminary injunction, effectively blocking her firing as the legal dispute proceeds through the courts.

The landmark decision, which is almost certain to face an appeal, ensures Cook’s participation in the pivotal September 16-17 Fed meeting, where policymakers are widely expected to reduce the key short-term interest rate. Judge Cobb concluded that Cook would likely prevail in her lawsuit, asserting that Trump had not presented a legally permissible cause for her removal under the statute governing the Fed, which limits such actions to conduct during a governor’s tenure.

Trump had moved to fire Cook on August 25, citing allegations of mortgage fraud related to properties purchased in 2021, prior to her appointment to the Fed. Cook’s legal team argued she was denied due process, a claim the court affirmed. This case marks an unprecedented challenge to the Fed’s long-standing independence, raising concerns among economists about potential political interference in monetary policy decisions.

The ruling comes just as the Senate Banking Committee is scheduled to vote Wednesday on Stephen Miran’s nomination to replace another Fed governor. The outcome of this broader power struggle could significantly impact the composition and policy direction of the central bank.

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