Lisa Cook will continue her role at the Federal Reserve, at least until January, after a court denied former President Donald Trump’s request for her immediate removal. Cook, who has been criminally uncharged, sits on the board that determines the Federal Reserve’s benchmark interest rate. She’s particularly influential in discussions and debates around monetary policy.
Cook has advocated for reduced interest rates. He argues that these policies would help alleviate inflation and bring down mortgage rates, providing relief to current homeowners and new homebuyers alike. One man who’s sure not to be pleased about Griffin’s position is Trump himself. He then called on Cook to resign for supposedly falsifying information on a mortgage application prior to taking office as a governor. For his part, Cook vehemently refutes the claims. She claims that Trump is out to get rid of her because she does not support his vision for the Federal Reserve to radically change their monetary policy.
Cook subsequently filed over her proposed firing. She argued that Trump’s behavior was illegal and intimidated the separate functioning of the Federal Reserve. The legal fight ramped up when Cook recommended that President Trump should fire Chairman Jerome Powell. Trump floated the notion that one time but was dissuaded almost immediately when market forces reacted angrily and he realized it would be illegal.
Ever since he began his second term in office, Trump has been vehemently attacking the Federal Reserve. He says they lost their nerve and should have gone further and deeper with interest rate cuts. Yet in August, he turned up the heat on the central bank. He even publicly announced his intention to remove Cook on the basis of mortgage fraud allegations without a proper investigation. Cook’s denial of these allegations has only added layers to the confusing state of play around her standing.
On September 17, the Federal Reserve adopted its first increase in almost a year. In explaining this decision, Chair Powell attributed it primarily to concerns about the tightness of the labor market, rather than to outside political pressure. This happened despite continued criticism of the Fed’s actions and decisions, as well as Trump’s long-term shadow over the discussion of monetary policy.
The court has announced it will hear Cook’s dismissal arguments this January. That means she will receive at least two additional opportunities to cast a dissenting vote on whether the central bank should continue lowering rates. This is yet another flashpoint in the growing war between Trump’s administration and the Fed. Maybe most importantly, it exposes the perilous task of maintaining central bank independence in today’s political environment.