A federal appeals court on Monday blocked President Donald Trump from removing Federal Reserve governor Lisa Cook from her post, issuing a 2-1 decision that allows her to remain on the central bank's board as policymakers meet to consider an interest-rate cut.
The decision prevents an immediate ouster announced by Trump in August on grounds of alleged mortgage fraud. Cook, a Biden appointee who is the first Black woman to serve as a Fed governor, denied the allegations and argued that the president lacked authority to remove her from the independent monetary policy body. The ruling means she can participate in the Federal Open Market Committee meeting scheduled for Tuesday and Wednesday, where officials are widely expected to lower interest rates to stimulate the labor market.
The appeals court majority granted relief after concluding that the legal path Trump invoked to remove Cook had not been established in court and that the matter raised significant questions about statutory limits on presidential power over Fed governors. Under the law that created the Federal Reserve in 1913, governors may be removed by a president only "for cause," though the statute does not define that term or specify removal procedures. No president has previously removed a Fed governor, and the statutes cited by the administration in asserting removal authority have not been tested in prior litigation.
The administration signaled it would appeal the decision to the Supreme Court. A 2-1 ruling at the appeals level gives the Supreme Court an opportunity to address the constitutional and statutory issues raised by the case, including the scope of presidential removal power and the degree of legal protection afforded to independently appointed officials who participate in economic policymaking.
Cook filed suit in August after the White House announced her dismissal, asserting she had been targeted because of her monetary policy views. The lawsuit and the court decision carry implications for the Fed's ability to set interest rates without political interference, a principle intended when Congress created an independent central bank more than a century ago.
The Fed has refrained from cutting its policy rate so far this year as it has sought to bring inflation under control. Inflation has remained a central concern for policymakers, with prices influenced by a variety of factors including tariffs on imported goods imposed by the administration, according to public commentary and analysis. Trump has repeatedly pressured the Fed to enact aggressive rate cuts and has publicly criticized Chair Jerome Powell for resisting faster easing. On Monday, Trump reiterated his demand for deeper reductions on his social media platform, writing that Powell "must cut interest rates, now, and bigger than he had in mind."
Legal experts said the case raises novel questions about the administrative law framework that governs independent agencies and the balance between political accountability and technocratic independence in economic policy. The appeals court's injunction preserves the status quo on the Fed board at a moment when the central bank's decisions will have immediate economic consequences.
The court did not resolve the underlying merits of whether the president may remove a Fed governor for the reasons the White House cited. Instead, the ruling temporarily shields Cook from removal while the litigation proceeds. If the administration pursues further review, the Supreme Court would have the final say on whether a president may directly remove a Fed governor under the statutes and circumstances at issue.
For now, Cook remains seated on the Fed board and will be able to take part in the coming policy deliberations, while the broader constitutional and statutory disputes set up by the case continue through the courts.