Trump sought to fire Cook Aug. 25, but a federal judge ruled late Tuesday that the removal was illegal and reinstated her to the Fed’s board.
Trump has accused Cook of mortgage fraud because she appeared to claim two properties as “primary residences” in July 2021, before she joined the board.
Cook did not join the Fed’s board until 2022.
If their appeal is succesful, Cook would be removed from the Fed’s board until her case is ultimately resolved in the courts, and she would miss next week’s meeting.
If the appeals court rules in Cook’s favor, the administration could seek an emergency ruling from the Supreme Court.
Cook was targeted for dismissal by Trump. 25 but was reinstated to the Fed’s board after a federal judge declared late Tuesday that the removal was unlawful. Since Cook seemed to claim two properties as “primary residences” in July 2021, prior to joining the board, Trump has accused her of mortgage fraud. A smaller down payment and a lower mortgage rate may result from such claims than from one of them being listed as a rental or second home. Cook has refuted the accusations.
Tuesday saw U. S. . Judge Jia Cobb of the District Court decided that the administration had failed to meet the legal requirement that Fed governors can only be removed “for cause,” which she claimed was restricted to wrongdoing while in office. Cook didn’t become a member of the Fed board until 2022.
Even though the behavior took place prior to her tenure as governor, Trump’s attorneys contended in their emergency appeal that Cook’s alleged action “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.”. “.”.
By Monday, the administration requested that an appeals court issue an urgent ruling overturning the lower court’s ruling. Cook would be removed from the Fed’s board until her case is finally settled in court and would not be able to attend the meeting next week if their appeal is successful.
The administration may ask the Supreme Court for an emergency ruling if the appeals court finds in Cook’s favor.
In either case, the Fed is anticipated to lower its benchmark interest rate by a quarter-point to roughly 4 points per percent the following week. Over time, lower borrowing costs for business, auto, and mortgage loans are frequently the result of the Fed lowering its key rate. In advance of Fed rate cuts, some of those rates have already decreased.
The Fed’s rate could be lowered by half a point if Miran, one of Trump’s top economic advisers, is approved to join the Fed next week.
A Senate committee has approved Stephen Miran’s nomination to be the governor of the Federal Reserve.
However, a rotation of 12 officials, including the seven members of the Fed’s board and five of the Fed’s twelve regional bank presidents, vote on whether and how much to cut.
Though some of the Fed’s bank presidents have voiced concerns about persistently high inflation and would likely be against such a significant cut, Trump’s other two Fed appointees, Christopher Waller and Michelle Bowman, may also be in favor of a half-point cut.
There may be dissenting votes from officials who favor a half-point cut as well as those who support a quarter-point cut if the Fed approves it.
