By Michael S. Derby
June 29 (Reuters) – Federal Reserve Governor Lisa Cook said the U.S. Supreme Court’s decision on Monday to block President Donald Trump’s attempted firing of her defended the central bank’s independence.
The 5-4 ruling by the nation’s highest court “recognizes that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment,” Cook said in a statement.
Trump’s action “was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people,” she said.
“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.
The Supreme Court said in its ruling that Fed officials do not serve at the pleasure of the president and that Trump’s attempt to remove Cook from the central bank did not afford her proper due process.
Fed governors, who are selected by the president and confirmed to their jobs by the Senate, serve fixed terms that are designed to provide them insulation from the political process to better set monetary policy. It is widely accepted that central banks that operate independently achieve better economic outcomes.
Trump attempted to fire Cook, the first Black woman to serve as a Fed governor, over allegations of mortgage fraud that struck many observers as bogus. The Supreme Court decision prevents Trump from firing Cook while she challenges the president’s move against her in court.
Since returning to office, Trump has directed considerable pressure against the Fed to lower interest rates despite the fact that doing so conflicted with the central bank’s mission to bring high levels of inflation back to its 2% target.
Trump’s Department of Justice also launched an unprecedented investigation into the central bank and its then-Fed Chair Jerome Powell over cost overruns at its Washington headquarters. Powell, who remains a Fed governor, argued that attack was revenge for not following the president’s orders on interest rate policy. That probe into the central bank is effectively over.
Cook’s legal team said in a statement that “making unproven allegations of mortgage fraud to justify a power grab has become a pattern of the Trump administration, but today the Supreme Court said no.”
Trump said in a post on his Truth Social platform that he was not done with Cook. “We will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!” he wrote.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama and Paul Simao)
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