The United States Supreme Court has ruled that Federal Reserve Governor Lisa Cook can remain in her post while her legal fight with President Donald Trump plays out.
In an unsigned order on Wednesday, the court rejected Trump’s request to remove Cook immediately and set oral arguments for January to determine whether the president has the authority to fire her.
Trump, who has repeatedly pressured the central bank to cut interest rates more deeply, announced in August that he was removing Cook over allegations she lied on a mortgage application before her appointment.
Cook denied the allegation, filed suit against the administration, and argued her removal would be unlawful and open the door to political interference in the Fed’s independence.
No president has previously attempted to remove a sitting Fed governor, who by statute can only be dismissed “for cause.” The law does not define that term or outline a clear procedure for firing.
A federal judge earlier placed a stay on the firing, allowing Cook to remain in office. The Supreme Court’s order upholds that decision.
In a statement, Cook’s lawyers said the ruling “rightly allows Governor Cook to continue in her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the Court’s order.”
At the White House, Press Secretary Karoline Leavitt told reporters that the administration also looks forward to the case being fully argued before the justices.
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The court’s decision means Cook will take part in at least two more Federal Open Market Committee meetings this year, giving her a vote on whether to continue cutting interest rates.
The Fed last reduced its benchmark rate on September 17, the first cut in nearly a year, citing concerns over the labor market.
Trump has argued that lower interest rates would ease inflation, reduce mortgage rates, and support growth.
He once threatened to fire Fed Chair Jerome Powell over the pace of rate cuts but backed down after questions about the legality of such a move.
Even so, Trump has kept up pressure on the central bank and recently appointed his top economic adviser, Stephen Miran, to temporarily fill a vacancy on the board.
Powell has repeatedly stressed that the Fed’s decisions are guided by data and internal assessments of the economy, not by political demands. He said September’s cut was driven by labor market concerns.
The Federal Reserve’s dual mandate is to keep inflation stable and maximize employment, using its benchmark interest rate as a key tool. Mortgage rates, while influenced by the Fed’s actions, are largely tied to Treasury bond yields.
For now, the court’s order ensures Cook will continue to shape monetary policy at a time of heightened political tension, while the broader constitutional question of presidential authority over the Fed awaits a landmark hearing in January.
BBC News
