Trump Fires Federal Reserve Governor, Legal Clash Tests Court Limits

President Donald Trump’s recent firing of Federal Reserve Governor Lisa Cook has sparked a significant legal battle, with Cook's legal counsel asserting that the president lacks the authority to remove her, citing the Federal Reserve Act which allows removal only "for cause." This move challenges the Supreme Court's May 2025 ruling that underscored the Fed's unique quasi-private status and independence from presidential termination powers, even as the Court allowed the firing of members of other federal boards. The Federal Reserve itself reaffirmed that governors can only be removed for cause and indicated it will abide by any court decisions, while Trump expressed readiness for a legal fight and plans to replace Cook with candidates more aligned with his economic agenda. Legal experts and critics warn that if Trump succeeds, it could undermine the Fed's political independence, potentially affecting its ability to manage inflation and influence borrowing costs. The case is expected to reach the Supreme Court, which may further clarify the limits of presidential authority over the Federal Reserve. This confrontation highlights ongoing tensions between maintaining central bank independence and presidential control over economic policy.