The Supreme Court ruled 5-4 on June 29 that Donald Trump cannot fire Federal Reserve Governor Lisa Cook — a decision seen as a loss for a president who has tried to influence the central bank and a win for the institution’s independence.
The court said Cook can remain on the central bank’s board of governors while she challenges Trump’s ability to dismiss her. That means lower courts will continue to debate whether Trump has “cause” to remove Cook, but Trump can’t dismiss her outright while the process plays out.
“I am grateful for this decision, not for my own sake, but for the sake of the American people, whose economic well-being depends on a central bank that answers to its mission, not political intimidation,” Cook said in a statement after the ruling. “For as long as I serve at the Federal Reserve, I will continue to uphold the principle of political independence in service to all Americans.”
Trump has consistently called on Fed policymakers to lower its benchmark for interest rates, aiming to stimulate the economy — an issue with which he’s struggled to win favorability with voters in his second term. The Fed typically lowers borrowing costs to help boost the labor market and raises them to stabilize prices. After three months of solid job growth and rising inflation, there is growing consensus among Fed policymakers for a hike later this year.
Trump attempted to fire Cook last August, after she voted alongside most of her colleagues to hold the benchmark rate steady at their first five meetings of 2025. He said the decision was based on allegations she committed fraud by lying on two home mortgage applications in 2021, not her votes on interest rates.
Following the decision, Trump took to Truth Social, saying the Supreme Court sent back the case “on a strictly procedural basis.” He added his administration “will take appropriate action immediately to make sure that someone who committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!”
Cook has denied any wrongdoing. Several economists, legal experts, and Cook said they felt her attempted termination was motivated by the president’s desire to influence monetary policy. In January, then-Fed Chair Jerome Powell called it “perhaps the most important legal case” in the Fed’s history.
Lisa Cook Remains a Fed Governor
While the ruling means Cook will be allowed to continue serving on the Fed’s board of governors, fighting the case cost nearly $1.2 million in legal services payments. Two nonprofits — the State Democracy Defenders Fund and Contina Impact — covered most of the payments, according to a filing made public by the U.S. Office of Government Ethics.
Former President Joe Biden first appointed Cook to the board in 2022 to fill an unexpired term, making her the first Black woman to serve in the role. He reappointed her to the board the following year. Her term does not expire until January 2038.
“I have no idea why they went after Lisa Cook, although I would guess that they didn’t just look at Lisa Cook,” Mike Skordeles, head of U.S. economics at Truist, said. “I think they were just looking for any way they could tip the votes in their direction. …Why it was Lisa Cook versus [Fed Gov.] Chris Waller? Well, maybe Chris Waller didn’t get a mortgage recently, or didn’t have anything that was even remotely something they could have come after.”
The 1913 Federal Reserve Act allows the president to remove a Fed official “for cause,” though Trump is the first to formally try.
Chief Justice John Roberts delivered the court’s majority opinion, writing that to agree with the Trump administration’s arguments “would in effect transform the Federal Reserve’s for-cause protection” for Fed officials “into at-will employment — an interpretive leap out of step with the statute Congress enacted and our Nation’s tradition of central banking protected from political interference.”
Does Lisa Cook Want Lower Interest Rates?
As a Fed governor, Cook serves on the Federal Open Market Committee, which is responsible for setting the federal funds rate, a benchmark for interest rates around the country.
She voted alongside most of her colleagues to cut rates three times late last year in response to U.S. employers’ historically low hiring. Although Cook is generally seen as “a dove,” or someone who typically favors lower rates, she has supported keeping rates steady so far in 2026.
However, in response to rising inflation caused by supply chain disruptions stemming from the Iran war, Cook said she may be open to raising them. The rate of annual inflation has remained above the Fed’s 2% target since 2021. In May, the Labor Department’s gauge hit 4.2% and the Commerce Department’s metric climbed to 4.1%.
“After five years of above-target inflation, I am particularly attuned to the risk that elevated inflation will become embedded in price- and wage-setting behavior,” Cook said May 27 at Stanford’s Institute for Economic Policy Research. “As such, I am prepared to raise rates if the expected disinflation does not appear in a timely manner.”
For now, the committee’s target range remains at 3.5% to 3.75%.
Fed Independence Concerns Ease, for Now
The decision comes after the Department of Justice ended its investigation into Powell and the Fed in April, after Sen. Thom Tillis, R-North Carolina, cited it as the reason he was holding up new Fed Chair Kevin Warsh’s confirmation.
That investigation, which Powell and other former Fed chairs condemned, was tied to the budget for a multibillion-dollar renovation project at the central bank’s Washington headquarters.
“Honestly, I won’t feel comfortable about the Fed’s independence until we get another president and a lot of it is because this guy has been so vocal and unabashed about what he wants,” Gbenga Ajilore, chief economist at the Center on Budget and Policy Priorities, said. “I’ve never seen such a targeted attack on an institution like this president.”
After the DOJ dropped the probe, U.S. Attorney for the District of Columbia Jeanine Pirro said the Inspector General for the Federal Reserve would look into the building cost overruns instead. Warsh said June 17 he expects the Inspector General’s report this summer and that he’d determine whether the project should be handled differently to be good stewards of taxpayer money.
(This story was updated to add new information.)
