- A federal judge has blocked Trump’s attempt to fire Fed Governor Lisa Cook.
- Cook is accused of mortgage fraud prior to her appointment, which she denies.
- The Federal Reserve Act allows removal “for cause,” but the term is undefined.
- This is the first time a president has tried to fire a Fed governor.
- The case could reach the Supreme Court and reshape central bank independence.
- The Fed is set to meet next week to decide on interest rates.
A federal judge has temporarily halted President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook, marking a dramatic early twist in what could become a landmark legal battle over the autonomy of the U.S. central bank.
The ruling, issued Tuesday, allows Cook to remain on the Fed’s Board of Governors while her lawsuit against the president proceeds. Cook is challenging Trump’s claim that she committed mortgage fraud prior to her appointment — an allegation she denies and which has not led to any formal charges.
At the heart of the case is the interpretation of the Federal Reserve Act, which states that governors can only be removed “for cause.” However, the law does not define what qualifies as sufficient cause, nor has it ever been tested in court — making this the first time a sitting president has attempted to fire a Fed governor.
Trump’s move has drawn sharp criticism from legal experts and economists, who warn that political interference in the Fed could undermine its credibility and destabilize financial markets. The judge’s preliminary injunction suggests that the allegations against Cook, which relate to conduct before she joined the Fed, may not meet the legal threshold for removal.
Cook’s legal team argues that the attempt to oust her is not only unlawful but threatens the foundational principle of central bank independence. The case is widely expected to reach the U.S. Supreme Court, where its outcome could redefine the boundaries between executive power and monetary policy.
The timing is critical. The Fed is scheduled to meet next week and is expected to announce its first interest rate cut in over a year — a decision that could shape the trajectory of the U.S. economy heading into 2026.
