A federal judge in Washington will decide Friday whether Lisa Cook can keep her seat at the Federal Reserve. Cook and her lawyers are asking for an emergency order that would stop President Donald Trump from firing her until the court has time to hear the case in full.
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The thing is, a lot hangs on this. The Fed meets in mid-September and is expected to cut interest rates. Cook’s vote could be important in shaping that decision. If she is sidelined, Trump’s allies may soon hold a majority on the Fed’s board.
Cook Fights Removal in Court
Cook’s lawsuit argues that presidents cannot remove Fed governors without cause. That standard usually means neglect of duty or misconduct in office. She says Trump has pointed only to old mortgage allegations that predate her service and have never been proven.
“It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual,” her complaint says. The aim, she argues, is to vacate her seat so Trump can fill it with someone who will push for faster rate cuts.
Trump Pushes His Case
Trump has claimed he does have the authority to act and cited the disputed mortgage allegations as his reason. He has floated two possible replacements for Cook: his economic adviser Stephen Miran and former World Bank president David Malpass. Both men have supported his criticism of the Fed for not cutting rates more aggressively.
“We have some very good people for that position,” Trump said earlier this week. “Maybe in my own mind, I have somebody that I like.”
Fed Awaits the Outcome
At the moment, the Fed is holding steady. A spokesperson said the central bank will continue to carry out its duties and will abide by whatever the court decides. The outcome will determine whether Cook takes her seat at the September policy meeting, when the Fed is expected to begin a new cycle of rate cuts.
The fight has also raised bigger questions. If Trump succeeds, it could signal that Fed independence is weaker than many thought, and any shift in control of the board could change the path of interest rates this year and beyond.
Court Sets the Next Step
Judge Jia Cobb will hear arguments Friday morning in Washington. She will decide whether to grant Cook a temporary order keeping her in place until the full case is resolved. A quick ruling is likely, but a final decision could take months.
This leaves investors and policymakers waiting on a single courtroom in Washington. The ruling will decide how much power the White House can exercise over the nation’s central bank.
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