Federal Appeals Court Prevents Trump from Removing Fed Governor Cook

A US judicial panel has ruled that President Donald Trump may not remove Federal Reserve governor Lisa Cook from her role.

The split ruling on Monday is a blow to Trump, as it means Cook can remain in place for the upcoming Fed gathering on Tuesday and Wednesday, where the board are anticipated to cut US interest rates.

Trump announced in August that he was firing Cook, claiming she had committed mortgage fraud. Cook denied the claims and stated that the president had no power to remove her.

This legal battle has major implications for the Fed's capacity to set monetary policy free from political influence from politicians.

Cook is a member of the governing body responsible for setting monetary policy in the US.

When US lawmakers created the Fed in 1913, it included provisions to preserve its autonomy from political pressure. No president has ever removed a Fed board member.

The statutes cited by Trump to justify his effort to remove Cook had never been challenged in a judicial setting. The Trump team is expected to challenge Monday's decision to the Supreme Court.

Under the law that created the Fed, its governors may only be dismissed by a president for cause, though the law does not define the term nor outline procedures for dismissal.

Cook, a Biden appointee and the pioneering African American woman to hold office as a Fed board member, sued Trump in August, arguing she was being targeted due to her monetary policy stance.

The Fed has not cut interest rates so far this year as it works to control inflation, which have been fueled in part by the effects of Trump's tariffs on foreign products.

Trump has consistently called for significant rate cuts and has criticized Fed Chair Jerome Powell over his management of interest rates.

A rate cut is anticipated this week, however, in an effort to stimulate a slow US labour market.

On Monday, Trump reiterated his call for a major interest rate cut, posting on his Truth Social platform that Fed Chair Jerome Powell "needs to cut interest rates, now, and larger than he had in mind."