The Federal Reserve retains a special status in the government that shields it from interference by the White House, the Supreme Court said in a decision that has critical implications for the bond market.
Justices ruled 5–4 on Monday that President Donald Trump was wrong to try ousting Fed Governor Lisa Cook last August because she didn’t receive due process.
Trump’s bid to fire her—the first such attempt ever—came as he was demanding the Fed lower interest rates, despite data showing inflation remained elevated, the result, in part, of his tariffs.
While Fed officials can be removed “for cause,” which has been interpreted to mean gross malfeasance or negligence, Cook was accused of committing mortgage fraud before joining the Fed. She has denied the charges and said she wasn’t given the chance to rebut the claims. Lower courts agreed with her.
“Under our precedents, Cook was entitled to notice and some opportunity to respond prior to her termination,” Chief Justice John Roberts wrote.
