A landmark ruling from the US Supreme Court has underlined the independence of the country’s central bank by blocking President Donald Trump from dismissing a Federal Reserve official. The knife edge five-to-four decision was handed down on Monday. It ruled that Trump cannot fire Lisa Cook as a Fed governor, a
Michael Hunter
Monday 29 June 2026 4:33 pm | Updated: Monday 29 June 2026 4:34 pm
A landmark ruling from the US Supreme Court has underlined the independence of the country’s central bank by blocking President Donald Trump from dismissing a Federal Reserve official.
The knife edge five-to-four decision was handed down on Monday. It ruled that Trump cannot fire Lisa Cook as a Fed governor, a post she has held since 2022.
The president had sought Cook’s dismissal amid accusations that she made false statements on a mortgage application. Pressure came from the White House amid wider criticism of the Fed and of Jerome Powell, its then-governor, with Trump hitting out at its failure to cut interest rates.
Cook also sits on the Fed’s rate-setting Federal Open Market Committee.
According to the Supreme Court’s majority opinion, the removal of Cook would have set a precedent for presidents to “remove a member of the Federal Reserve at any time, for any reason, without any notice before, and without any judicial check after.” It was written by Chief Justice John Roberts.
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The ruling found that Congress curbed presidential power to fire Fed officials “for good reason”.
Fed independence
Operational independence at the central bank from day-to-day political interference is seen as a cornerstone of the international investment case in US assets. That is especially true for the market in Treasuries, or US government bonds, which underpin much of the globalised financial system.
The yield on 10-year US sovereign debt is known as the risk-free rate because the US has never missed a payment, and is used as a benchmark for returns on offer from other assets when pricing risk across a variety of global markets.
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A wave of turbulence rippled through the market when Trump piled unprecedented political pressure on Powell, who the president himself appointed during his first term in office. There was even a criminal probe into Powell over cost overruns for renovations of Fed buildings, which was dropped by the Justice Department in April.
Powell remains on the FOMC after his term as governor ended.
He handed over the helm to Kevin Warsh, also appointed by Trump. Republicans had indicated they would hold up Warsh’s confirmation in the post if the case against Powell continued.
Three former heads of the Fed – Janet Yellen, Ben Bernanke and Alan Greenspan – issued a joint statement condemning the case as a move to erode the central bank’s independence.
It was backed from 10 other former officials, known across financial markets.
Cook is the first black woman to sit on the board of the world’s most influential central bank, alongside six other members.
The ruling, in effect, singled out the Fed for protections from political interference. It set the “good reason” requirement for action against the central bank, but cleared similar action taken by Trump at the Federal Trade Commission in a six-to-three vote.
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