Federal court blocks Trump from sacking Lisa Cook

US President Donald Trump cannot oust Federal Reserve governor Lisa Cook from her role, a federal appeals court has ruled.

The 2-1 ruling on Monday is a blow to Trump as it means Cook can now stay in place for the Fed’s policy meeting on Tuesday and Wednesday, where it is expected to cut US interest rates.

Trump announced in August that he was firing Cook on the grounds that she had committed mortgage fraud. Cook denied the allegations and said the president had no authority to sack her.

The case has ramifications for the Fed’s ability to set interest rates without interference from politicians.

Cook is part of the board responsible for setting interest rates in the US.

In setting up the Fed in 1913, Congress included provisions that kept it independent from politics. No president has ever removed a Fed governor.

The laws under which Trump claimed he had the right to sack Cook have never been tested in court. The Trump administration is expected to take Monday’s ruling to the Supreme Court.

Under the law that created the Fed, its governors may be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal.

Cook, a Biden appointee and the first black woman to serve as a Fed governor, sued Trumpin August, claiming she was being sacked for her monetary policy stance.

The Fed has not cut interest rates so far this year as it tries to keep inflation under control. with prices rising in part due to the as the impact of Trump’s tariffs on goods being imported to the country.

Trump has repeatedly demanded aggressive rate cuts, berating the Fed’s chair Jerome Powell over monetary policy.

A cut is expected this week, however, in order to stimulate a sluggish labour market in the US.

Trump on Monday reiterated his call for a major interest rate cut, writing on his Truth Social platform that Fed Chair Jerome Powell “must cut interest rates, now, and bigger than he had in mind”.

By BBC News