Appeals Court Blocks Trump’s Bid to Remove Fed Governor Lisa Cook Ahead of Rate Vote

Lead: A federal appeals court on Monday ruled that Federal Reserve Governor Lisa Cook may remain on the central bank’s seven-member board, blocking President Trump’s emergency effort to fire her just hours before the Fed’s two-day meeting on interest rates.

Nut Graf: The decision underscores the judiciary’s role in safeguarding the Fed’s political independence at a critical juncture for U.S. monetary policy, with markets watching for potential rate cuts amid slowing growth and persistent inflation.

Court’s Ruling and Dissent

The U.S. Court of Appeals for the D.C. Circuit issued a 2-1 decision denying the administration’s request for an immediate stay of a lower-court injunction that had reinstated Cook. Judge Brad Garcia, joined by Judge Michelle Childs, held that Cook showed a strong likelihood of success on her due-process claim, while Judge Gregory Katsas dissented, arguing no such error warranted relief.

Context of the Dispute

• President Trump announced Cook’s removal on social media in late August, citing unproven mortgage-fraud allegations.
• A federal district court judge blocked the firing, finding it likely violated the Federal Reserve Act’s “for-cause” protections for governors.
• Cook filed suit to permanently enjoin her removal, arguing the allegations fail to meet the statutory standard.

Fed Meeting Implications

Cook’s participation preserves the full board for this week’s policy vote, where economists widely expect a 0.25 percentage-point rate reduction to around 4.1 percent. Any successful challenge in the Supreme Court could reshape the board’s composition before the Fed’s quarterly economic projections are released.

Next Steps

The Trump administration is poised to seek emergency relief from the Supreme Court. If the high court intervenes, it could set a precedent for executive influence over an institution long insulated from day-to-day politics.