President Donald Trump cannot remove Federal Reserve Governor Lisa Cook before this week’s policy meeting, a federal appeals court ruled Monday. The split 2-1 decision from the U.S. Court of Appeals for the D.C. Circuit comes just hours before the central bank’s two-day monetary policy meeting expected to consider an interest rate cut. Cook will remain on the Fed’s Board of Governors for now as her legal case against Trump moves forward.
This ruling represents an unusual and significant moment because no U.S. president has ever attempted to remove a sitting Fed governor since the Federal Reserve’s founding in 1913. The court majority, Judges Bradley Garcia and J. Michelle Childs, both Biden appointees, emphasized that Cook was removed without due process. They wrote that the government “failed to provide Cook even minimal process” before the president’s dismissal attempt. Under the Federal Reserve Act, governors can only be removed “for cause,” a term that courts have long considered protecting Fed independence by requiring justification linked to misconduct during the term. Trump’s allegations of mortgage fraud against Cook relate to events before she took office, which the court found unlikely qualifies as cause for removal.
The dissenting judge, Gregory Katsas, a Trump appointee, argued the president had cause to remove Cook. However, the majority’s ruling maintains that Cook has a protected property interest in her 14-year Fed term, and that her removal requires at minimum a meaningful chance to defend herself. This ruling also blocks the Justice Department’s request to delay an injunction issued by a lower court that temporarily prevents Trump from firing Cook.
Lisa Cook’s legal team argued that her premature removal before the policy meeting would create market uncertainty domestically and abroad, and that the public interest favors her remaining in position while the case plays out. Cook herself denies any wrongdoing and refutes the mortgage fraud claims Trump has cited. These claims stem from accusations that she improperly claimed multiple properties as primary residences, which could affect tax exemptions and mortgage terms. However, documents have shown no violation of such tax rules, according to court findings.
The timing of the court decision is notable given that the Federal Reserve’s interest rate committee will begin discussions Tuesday, with many predicting a rate cut aimed at supporting a softening U.S. labor market. This legal saga highlights the tension between the White House’s political agenda and the Fed’s independent mandate. Trump has openly criticized Fed Chair Jerome Powell, labeling him with harsh terms for keeping interest rates high and has made similar demands for rate cuts. Attempts to assert direct White House control over the Fed are rare and raise concerns among economists who stress the importance of an autonomous central bank to maintain market confidence and effectively manage inflation.
Adding another layer to this unfolding situation, the Senate confirmed Trump’s economic adviser Stephen Miran to a different seat on the Fed’s Board of Governors on the same day as the court ruling. Miran is taking an unpaid leave from his White House role to serve at the Fed, meaning that Trump’s administration has a direct voice inside the central bank even as Cook remains.
If Trump eventually succeeds in removing Cook, it would mark a historic first in the Fed’s 112-year existence. Until now, the Fed has weathered political pressures by maintaining operational independence designed by Congress. The statute’s intention was to shield the central bank against political meddling that could undermine monetary policy stability.
This case is likely headed for the Supreme Court as the Trump administration signals it will challenge the appeals court decision. The outcome will have significant repercussions not only for the Fed’s independence but also for how future presidents might interact with this critical institution.
In the meantime, Lisa Cook stays on the Federal Reserve board, participating in a crucial policy meeting amid a politically charged environment that questions how much influence a president should have over monetary policy.
