Washington (AFP) – The US Supreme Court on Wednesday barred Donald Trump from immediately firing Federal Reserve Governor Lisa Cook, as the president mounts multiple challenges that have tested the independence of the central bank. In an order, the court said it had deferred the request “pending oral argument in January 2026,” ensuring that the Fed governor will remain in her post at least until the case is heard.
Over the summer, Trump attempted to fire Cook, who serves on the Fed’s powerful seven-person governing board, claiming that she had falsified statements on her mortgage agreements. Cook has filed a lawsuit challenging her firing, arguing that she was not given a chance to meaningfully contest the allegations against her.
In response to Wednesday’s Supreme Court order, a White House spokesperson told AFP that the administration had “lawfully removed” Cook, and looked “forward to ultimate victory after presenting our oral arguments before the Supreme Court in January.” Cook currently remains a member of the Fed’s governing board and the bank’s powerful interest rate-setting committee.
“It’s a positive development from her perspective in the sense that at least it’s a reprieve and she can serve until the case in the Supreme Court,” University of Richmond law professor Carl Tobias told AFP. “It doesn’t mean she’s going to win her case,” he added. “But I think it’s a hopeful sign from her perspective.”
– Fight over independence – Cook, who is the first Black woman to serve on the independent central bank’s governing board, was nominated to her position by former US president Joe Biden and then approved by a vote in the US Senate. She is due to remain at the Fed until 2038.
Trump has been a fierce critic of the Fed’s decision to keep interest rates elevated as it battles against inflation, which remains stuck stubbornly above its long-term target of two percent. The US central bank has a dual mandate from Congress to act independently to tackle both inflation and employment by either raising or lowering its key lending rate.
At its most recent meeting, the Fed’s rate-setting committee — including Cook — voted overwhelmingly to cut the bank’s key lending rate by a quarter of a percentage point to between 4.00 and 4.25 percent. The Supreme Court’s decision to delay the trial until January marks a rare instance of pushback by the conservative-dominated court, which has been deferential to the current administration.
Trump’s attempts to fire a member of the independent central bank have unnerved investors and drawn criticism from close to 600 economists, who recently penned a letter expressing their support for both Cook and central bank autonomy. Wednesday’s order is “partly a recognition by the justices that the Fed board is special and does have independence,” Tobias, the law professor, told AFP. “That is important,” he added.
Asked to comment, a Federal Reserve spokesperson referred AFP to a statement from August in which it said it would “abide by any court decision.”
© 2024 AFP
