A federal appeal court has dealt a blow to President Donald Trump’s efforts to assert control over the U.S. central bank by rejecting his bid to remove Federal Reserve Governor Lisa Cook.
The ruling, delivered Monday by the U.S. Court of Appeals for the District of Columbia Circuit, comes just as the Fed prepares for a critical two-day policy meeting expected to produce an interest rate cut.
In a split 2-1 decision, the court said the administration violated Cook’s constitutional rights when it attempted to terminate her without notice or an opportunity to respond to allegations.
Trump has claimed “cause” for her removal, citing unproven accusations of mortgage fraud, though Cook has never been charged with a crime.
Judges Bradley Garcia and Michelle Childs, writing for the majority, emphasized that the Federal Reserve Act only permits dismissal of governors “for cause” and requires clear evidence and due process.
“The government failed to provide Cook even minimal process—that is, notice of the allegation against her and a meaningful opportunity to respond—before she was purportedly removed,” they wrote. The panel concluded Cook is likely to prevail on both statutory and constitutional grounds.
In dissent, Judge Gregory Katsas sided with the White House, arguing that Trump had sufficient grounds to justify removal. The ruling, however, ensures Cook remains in her post while litigation continues.
The case has drawn national attention because it touches on the independence of the Federal Reserve, a principle long seen as essential to maintaining economic stability and investor confidence.
Cook, appointed by President Joe Biden in 2022, is the first Black woman to serve on the Fed’s Board of Governors.
Her removal, had it succeeded, would have been unprecedented: no president has ever fired a Fed governor in the institution’s 111-year history.
ALSO READ: Lisa Cook dragging Trump to court for illegality
The court battle also comes amid Trump’s public campaign to pressure the central bank into lowering interest rates more aggressively. He has repeatedly berated Fed Chair Jerome Powell, calling him a “numbskull” and “loser,” while hinting at Powell’s removal before backing away.
Economists warn that political interference in rate decisions risks undermining the Fed’s credibility and could destabilize markets.
Cook’s legal team has accused the administration of attempting to “redefine” the meaning of “cause” so broadly that it would allow a president to fire governors simply for policy disagreements. They argue such a move would dismantle the Fed’s independence and set a dangerous precedent.
“President Trump does not have the power to unilaterally redefine ‘cause’—completely unmoored to caselaw, history, and tradition,” they wrote.
The White House counters that Cook misrepresented her finances and cannot be trusted to manage the nation’s money supply. Still, Monday’s decision keeps her in place and underscores the steep legal hurdles facing any presidential attempt to override central bank autonomy.
At the same time, the Senate confirmed Stephen Miran, Trump’s nominee for another Fed Board seat, highlighting the president’s dual strategy of reshaping the Fed through appointments while seeking to remove existing governors.
The case is expected to move forward in the coming months, but for now, the court’s intervention signals a reaffirmation of the Fed’s independence at a moment of heightened political and economic tension.
