Lisa Cook, the US Federal Reserve governor, will keep her job for now, despite Donald Trump’s extraordinary bid to remove her from the central bank’s board with immediate effect.
The US supreme court deferred action on the Department of Justice’s request to allow the president to fire Cook, at least until it hears oral arguments on the case in January.
Trump has launched an unprecedented campaign to exert greater control over the Fed, publicly lambasting the US central bank over its decisions, installing a close ally on its board of governors and attempting to fire Cook.
His battle for influence has raised questions over the independence of the Fed, which for decades has steered the US economy without political interference.
Trump tried to “immediately” dismiss Cook in August, citing unconfirmed allegations of mortgage fraud dating back to before she joined the Fed in 2022. She has denied wrongdoing, and argued the president has no authority to fire her.
On Wednesday morning the supreme court considered his attempt to remove Cook – the first-ever bid by a president to fire a Fed official – and the administration’s complaints about judge’s order which had temporarily blocked Trump from firing her while litigation over the termination continues in a lower court.
The justices declined to immediately decide a justice department request to put on hold the judge’s order, enabling Cook to stay in post for now.
In creating the Federal Reserve, often referred to simply as the Fed, in 1913, Congress passed a law called the Federal Reserve Act that included provisions to shield the central bank from political interference, requiring governors to be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal. The law has never been tested in court.
Jia Cobb, a Washington-based US district judge, on 9 September ruled that Trump’s claims that Cook committed mortgage fraud before taking office, which Cook denies, were probably not sufficient grounds for removal under the Federal Reserve Act.
Cook, the first Black woman to serve as a Fed governor, sued Trump in August after the president announced he would remove her. Cook has said the claims made by Trump against her did not give the president the legal authority to remove her and were a pretext to fire her for her monetary policy stance.
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Trump has made no secret of his plans to influence the Fed, publicly describing plans to swiftly build “a majority” on its interest-rate setting committee of policymakers.
He has repeatedly broken with precedent to demand rate cuts, and attack senior Fed officials, including its chair, Jerome Powell, when they repeatedly defied these calls.
Powell has repeatedly stressed he is “strongly committed” to maintaining the Fed’s independence. His term as chair is due to end next year. The Trump administration has been drawing up plans to appoint a successor.
Reuters contributed reporting.
