US Supreme Court Limits President's Power to Remove Federal Reserve Governor

The US Supreme Court has ruled that Federal Reserve Governor Lisa Cook can continue serving on the Federal Reserve Board while she challenges her dismissal by President Donald Trump. The decision limits the President's authority to remove Federal Reserve governors and reinforces the independence of the country's central bank.

Chief Justice John Roberts, writing for the majority, rejected all the arguments put forward by the Trump administration. The Court held that accepting the administration's interpretation would effectively convert the statutory protection given to Federal Reserve governors into "at-will employment," contrary to the Federal Reserve Act of 1913 and the long-standing principle of protecting the central bank from political interference.

President Trump had dismissed Cook in August 2025, alleging that she committed mortgage fraud by falsely claiming a second property as her primary residence to obtain favourable loan terms. Cook has denied the allegations, and no court has found her guilty of any offence.

Under the Federal Reserve Act, a President may remove a Federal Reserve governor only "for cause." The Supreme Court held that the allegations against Cook could not justify her immediate removal before the legal process had concluded.

Cook had challenged her dismissal before the US District Court for the District of Columbia, where Judge Jia M. Cobb granted a preliminary injunction allowing her to remain in office. The matter eventually reached the Supreme Court, which allowed that protection to continue.

Following the ruling, President Trump stated that he would continue efforts to remove Cook, describing the Supreme Court's decision as procedural and promising to take further action.

The case comes amid ongoing tensions between President Trump and the Federal Reserve. Over the past year, Trump has repeatedly criticised the central bank and its Chair, Jerome Powell, urging the Federal Reserve to reduce interest rates and accusing it of harming the US economy. The judgment is seen as reaffirming the legal protections that safeguard the Federal Reserve's independence from political influence.