The Supreme Court on Wednesday delivered a closely watched ruling that allows Federal Reserve governor Lisa Cook to remain in her position for the time being, while also agreeing to hear arguments in a major case concerning President Donald Trump’s attempt to remove her from office. The justices scheduled the case for January, meaning Cook will continue serving through at least the end of the year.
The decision sets the stage for a consequential battle over the independence of the Federal Reserve, an institution with immense influence over the U.S. economy and global financial markets. At issue is whether the president has the authority to oust a sitting Fed governor, a move that could dramatically alter how the central bank balances political pressures against its mission to manage inflation, stabilize the financial system, and set interest rates.
The temporary ruling is seen as a sign of caution from at least some of the justices, who may be wary of endorsing Trump’s aggressive bid to exert tighter control over the central bank. It also contrasts with several rulings earlier this year that granted Trump broader power to remove leaders of regulatory agencies. By leaving Cook in place for now, the Court is ensuring she will take part in the Fed’s final two meetings of 2025 — in October and December — where policymakers will debate whether to continue cutting interest rates amid a cooling labor market.
A group of heavyweight economic voices — including former Treasury secretaries, past Federal Reserve chairs, and other high-ranking officials — filed a friend-of-the-court brief warning that Cook’s sudden removal could jeopardize both “the credibility and efficacy of U.S. monetary policy.” Their warning reflects broader concerns that weakening the Fed’s independence could damage investor confidence and disrupt the economy.
The timing of the Court’s review also carries significant political implications. If the justices delay a final ruling until after January, Trump could miss an early opportunity to reshape the Fed’s leadership more directly. The presidents of the 12 regional Fed banks — who also help set monetary policy — are due for reappointment in February. Should Trump gain a majority on the seven-member Fed board by then, he could move to replace some of those officials. Currently, three governors are viewed as generally aligned with Trump’s economic agenda, while others, including Cook, have resisted his push for deeper interest rate cuts.
The administration’s case rests on allegations that Cook committed mortgage fraud, charges she denies. No criminal case has been filed, and reporting from The Washington Post has raised questions about the validity of the claims. Nonetheless, Solicitor General D. John Sauer argued in court filings that Trump has sufficient cause to remove her, saying, “The President’s strong concerns about the appearance of mortgage fraud, based on facially contradictory representations made to obtain mortgages by someone whose job is to set interest rates that affect Americans’ mortgages, satisfies any conception of cause.”
Cook’s lawyers countered that removing her abruptly would undermine the very principles on which Congress designed the Federal Reserve — independence from short-term political influence. “Her immediate removal would subvert the Federal Reserve’s historical independence and disrupt the American economy,” they wrote. Economists widely agree that presidents pressuring the Fed to keep interest rates artificially low for political gain risks fueling runaway inflation and long-term instability.
Trump, who has openly criticized the Fed for not cutting rates more aggressively, previously explored firing Chair Jerome Powell. At the Fed’s September meeting, policymakers approved a quarter-point rate cut, with Cook voting in favor. The administration attempted to remove her ahead of that meeting, but the effort collapsed after both a federal judge and an appeals court sided with Cook. The appeals court faulted the administration for failing to provide even the most basic due process protections. “The government does not dispute that it failed to provide Cook even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed,” the majority wrote in its 2-1 ruling.
With the Supreme Court now set to weigh in, the outcome could redefine the balance of power between the White House and the Federal Reserve. For now, Cook remains on the board, participating in decisions that will shape the direction of interest rates, the strength of the dollar, and the confidence of global markets. But when arguments are heard in January, the stakes will be nothing short of the future independence of America’s central bank.
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