Appeals Court Prevents Trump from Removing Fed Governor Lisa Cook Ahead of FOMC Meeting
The U.S. Court of Appeals for the District of Columbia Circuit ruled on Monday that President Donald Trump cannot terminate Federal Reserve Governor Lisa Cook before the Federal Open Market Committee (FOMC) convenes for its crucial policy meeting. This decision allows Cook to retain her position and participate in the two-day session beginning Tuesday, where the Fed will deliberate on potential interest rate cuts.
Trump’s legal team had filed an emergency motion seeking to pause a lower court’s injunction that blocked Cook’s dismissal while her lawsuit against the president’s action proceeds. However, the appeals court found that the administration did not meet the stringent standards required for such a stay.
Cook, a Biden appointee and consistent ally of Fed Chair Jerome Powell, faces allegations from the Trump administration’s housing finance director, Bill Pulte, accusing her of mortgage fraud—a charge Cook denies. The president’s move to remove her “for cause” in late August marked an unprecedented challenge to Federal Reserve independence, particularly amid Trump’s ongoing pressure for lower interest rates.
The three-judge panel featured two Biden appointees, J. Michelle Childs and Bradley Garcia, who concurred in denying the stay, emphasizing constitutional due process protections. Judge Garcia’s concurring opinion specifically endorsed the lower court’s ruling that Trump’s attempt to fire Cook likely violated her due process rights. Conversely, Judge Gregory Katsas, appointed by Trump, dissented, arguing that Cook’s alleged pre-appointment misconduct did not protect her from removal and favored granting the stay.
This ruling highlights the constitutional and institutional tensions between the executive branch and the Federal Reserve, particularly as Trump continues to challenge the Fed’s autonomy and its resistance to cutting interest rates.
FinOracleAI — Market View
The court decision maintaining Cook’s position ahead of the FOMC meeting preserves the status quo at the Federal Reserve, allowing for an uninterrupted policy deliberation process. This outcome supports market expectations for a measured approach to interest rate decisions without executive interference. However, ongoing legal challenges and political pressures introduce uncertainty about the Fed’s future governance and independence.
Impact: neutral
