A federal appeals court has determined that U.S. President Donald Trump does not have the authority to remove Federal Reserve governor Lisa Cook from her position. The 2-1 ruling was issued on Monday, allowing Cook to participate in the upcoming Federal Reserve policy meeting where a decision to cut U.S. interest rates is anticipated.
In August, Trump announced his intention to fire Cook, citing allegations of mortgage fraud, which Cook has denied. She contends that the president lacks the power to dismiss her. This case raises important questions about the independence of the Federal Reserve in setting interest rates devoid of political influence.
Cook serves on the board that is responsible for determining interest rate policy in the U.S. The Federal Reserve was established in 1913 with provisions aimed at safeguarding its operations from political interference. Historically, no president has successfully removed a Federal Reserve governor.
The statutes under which Trump claimed he could remove Cook have not been subject to judicial review. The Trump administration is expected to appeal the recent ruling to the Supreme Court. According to the founding law of the Federal Reserve, governors can only be dismissed by a president for “cause,” a term that remains undefined and lacks an outlined procedure for removal.
Cook, appointed by President Biden, is notable for being the first Black woman to serve as a Federal Reserve governor. She filed a lawsuit against Trump in August, asserting that her potential firing was linked to her views on monetary policy.
The Federal Reserve has maintained its current interest rates throughout the year to control inflation, which has been influenced by factors including tariffs imposed during Trump’s administration. In light of a weakening labor market, a rate cut is expected this week. Trump has reiterated his demand for substantial rate cuts, specifically calling on Fed Chair Jerome Powell to take more aggressive action.
Source: https://www.bbc.com/news/articles/c0ezqr7l774o?at_medium=RSS&at_campaign=rss