WASHINGTON (BN24) — A federal appeals court on Monday rejected President Donald Trump’s attempt to oust Federal Reserve Governor Lisa Cook, allowing her to remain on the central bank’s board just days before a pivotal vote on interest rates.
The decision delivers a setback to Trump’s unprecedented effort to remove a sitting Fed governor — a move that, if successful, would have marked the first dismissal in the central bank’s 112-year history.
The Trump administration is expected to appeal to the U.S. Supreme Court in a last-minute attempt to block Cook’s participation in this week’s Federal Open Market Committee (FOMC) meeting, where policymakers are weighing whether to adjust interest rates.
Cook has separately filed a lawsuit seeking to permanently block her firing, which could extend the legal battle for months.
The White House push to remove Cook has raised alarms among economists and lawmakers, who warn the effort threatens the political independence of the Federal Reserve. Central banks are traditionally shielded from day-to-day politics to ensure they can make unpopular but necessary decisions, such as raising rates to combat inflation.
Trump first moved to fire Cook on Aug. 25, but a federal judge ruled the action unlawful and reinstated her to the Fed board. The appeals court’s ruling on Monday upheld that decision.
At the same time, the Senate has confirmed Trump’s nominee Stephen Miran to an open Fed seat, giving the administration new influence over the seven-member board despite the setback on Cook.
Cook, who was appointed by President Joe Biden in 2022, has faced allegations raised by Trump appointee Bill Pulte, who accused her of mortgage fraud for allegedly claiming two properties as “primary residences” in 2021 before joining the Fed. Such claims can reduce mortgage costs by lowering rates and down payments.
Cook has denied wrongdoing, and the allegations have not resulted in formal charges.
The appeals court’s decision comes as the Fed prepares to begin its two-day policy meeting Tuesday, with investors closely watching whether officials will raise rates again to counter inflation. Cook’s continued presence on the board means she will take part in the vote, keeping Trump from reshaping the Fed as dramatically as he had sought.
