Trump Authority Seeks Urgent Judicial Decision to Discredit Cook from Federal Reserve Council
Federal Reserve Board Drama: Trump's Bid to Remove Lisa Cook and the Pending Interest Rate Decision
The Federal Reserve Board is bracing for an unprecedented week as two significant events are set to unfold. The first revolves around the legal battle between the administration of President Donald Trump and Federal Reserve Governor Lisa Cook, while the second centers around the anticipated interest rate decision by the Fed.
President Trump's administration submitted an application to revoke the confirmation of Lisa Cook as a member of the Federal Reserve Board of Governors. The application, filed on unspecified grounds, accused Cook of mortgage fraud related to false information in a loan application from July 2021. If the appeals court's emergency decision reverses the lower court, Cook would be removed from the Fed's board until her case is ultimately resolved, missing next week's interest rate meeting.
Trump's lawyers argued in their emergency appeal that Cook's alleged actions "indisputably calls into question Cook's trustworthiness and whether she can be a responsible steward of the interest rates and economy." However, a federal judge, Jia Cobb, ruled late Tuesday that the administration had not satisfied the legal requirement that Fed governors can only be fired "for cause."
Meanwhile, the Fed is expected to cut its benchmark interest rate next week by a quarter-point to about 4.1%. However, the number of dissenting votes could arise from this decision. If the Fed approves a quarter-point cut, there could be dissenting votes both from officials who preferred no cut and from those who support a half-point.
In a related development, Senate Republicans are pushing to confirm Stephen Miran, President Donald Trump's nominee to an open spot on the Fed's board. If approved, Miran, a top economic adviser to Trump, could push for a steeper half-point reduction to the Fed's rate. Trump's two other appointees to the Fed - Christopher Waller and Michelle Bowman - might also support a half-point cut.
The number of Fed officials who vote on interest rate changes is 12, including the seven members of the board and five regional bank presidents. Some of these bank presidents have concerns about inflation that could lead them to oppose a large interest rate cut. Several of them have already expressed their concerns about stubbornly elevated inflation.
The White House's move to remove Cook represents an extraordinary effort to shape the board before the Fed's interest rate-setting committee meets. If the appeals court rules in Cook's favor, the administration could seek an emergency ruling from the Supreme Court. If the appeals court's emergency decision reverses the lower court, Cook would be removed from the Fed's board until her case is ultimately resolved, missing next week's meeting.
The Fed's interest rate decision next week is expected to have wide-ranging implications for the U.S. economy, and the ongoing legal battle between the Trump administration and Lisa Cook adds another layer of uncertainty to the proceedings.
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