Fed independence test: US Supreme Court signals support for Lisa Cook, questions Donald Trump’s bid to remove her

The US Supreme Court on Wednesday appeared inclined to allow Federal Reserve governor Lisa Cook to continue in office, signalling scepticism over President Donald Trump’s attempt to fire her — a move that could have far-reaching implications for the independence of the central bank, AP reported.

During nearly two hours of arguments, a majority of the nine-judge bench questioned the basis and timing of Trump’s effort to remove Cook, the first Black woman to serve as a Fed governor, over allegations of mortgage fraud that she has strongly denied. No US president has fired a sitting Fed governor in the institution’s 112-year history.




Allowing Cook’s removal to proceed “would weaken, if not shatter, the independence of the Federal Reserve,” Justice Brett Kavanaugh said, echoing concerns raised by several other justices. At least five members of the court appeared doubtful that Trump’s action should be allowed to take effect while Cook’s legal challenge is still pending.

Both Cook and Federal Reserve Chair Jerome Powell were present in the packed courtroom as the justices considered whether Cook should remain in her post while lower courts continue to review the case. Judges in those courts have so far allowed her to stay on the Fed’s seven-member board.

The case is being closely watched by Wall Street and policy circles, as Trump’s critics argue that the underlying motivation is his desire to exert greater control over US interest-rate policy. If Cook were removed, Trump could appoint a replacement and potentially secure a majority on the Fed board.

Trump has repeatedly criticised the Fed for not cutting rates aggressively enough, arguing that sharply lower rates would reduce government borrowing costs and ease pressure on households buying homes, cars and other big-ticket items. Speaking earlier on Wednesday at the World Economic Forum in Davos, he again called for the US to have “the lowest interest rates in the world”.

The Fed cut rates three times in the last four months of 2025 but has signalled caution going forward because of inflation concerns.

The immediate issue before the court is procedural: whether Cook can remain in office while the dispute plays out. The justices could deny Trump’s emergency appeal, leaving her in place for now. Chief Justice John Roberts suggested it may be ineffective to simply send the matter back to lower courts without offering clearer guidance.

The confrontation has escalated sharply. The Justice Department has opened a criminal investigation into Powell and issued subpoenas to the Fed — actions Powell has publicly described as “pretexts” masking frustration over monetary policy.

Trump’s legal team argues that Cook’s alleged mortgage filings — claiming two properties as primary residences in 2021 — amount to “gross negligence at best” and justify her dismissal. Cook, who has not been charged with any crime, denies wrongdoing, saying the case rests on a single, innocuous reference contradicted by other accurate disclosures.

While the Supreme Court has previously allowed Trump broad latitude to dismiss heads of other agencies, the justices signalled that the Fed’s unique, quasi-independent status may warrant a different approach.