President Trump is challenging a federal court injunction that prevents him from removing Federal Reserve (Fed) Governor Lisa Cook, filing appeals arguing his “for cause” removal power extends beyond misconduct committed while in office.
The legal battle intensifies as economists expect a 25 basis-point rate cut on September 17, with Trump demanding aggressive monetary easing and threatening “major lawsuits” against Fed leadership.
The dispute stems from Trump’s August attempt to fire Cook over alleged false mortgage statements, which her lawyers called baseless.
Source: CourtListenerDistrict Judge Jia Cobb issued a preliminary injunction on September 9 protecting Cook’s position, prompting Trump’s Justice Department to seek an immediate stay pending appeal.
Trump’s broader campaign against Fed independence includes branding Chair Jerome Powell a “numbskull” and nominating Stephen Miran, a pro-crypto advocate, to the Federal Reserve Board.
Earlier this month, European Central Bank President Christine Lagarde warned that undermining Fed independence would create “very serious danger” for global economic stability.
Trump Administration Escalates Constitutional Showdown Over Fed Control
The Justice Department argues in its filing that presidential “for cause” determinations are unreviewable exercises of discretion, claiming courts cannot second-guess removal decisions involving core Article II responsibilities.
The filing contends that Cook’s alleged financial misrepresentation constituted sufficient grounds for dismissal regardless of timing.
Trump’s legal team disputes the district court’s “in office” limitation on removal power, arguing Congress intentionally omitted such restrictions from the Federal Reserve Act.
The administration maintains that pre-confirmation misconduct can constitute cause if it relates to an officer’s fitness to serve.
The constitutional battle extends beyond Cook’s case, with similar challenges pending in multiple circuits involving Trump’s removal of officials from independent agencies.
The Supreme Court’s recent decisions have gradually eroded traditional “for cause” protections that independent agencies enjoyed for 85 years.
Trump intensified pressure through coordinated attacks from Commerce Secretary Howard Lutnick and Vice President JD Vance, who labeled Fed policy “monetary malpractice.”
The president stopped short of threatening Powell’s termination but ominously suggested he “may have to force something” if rate cuts don’t materialize.
Miran’s nomination to fill Adriana Kugler’s vacant seat adds a pro-crypto voice to the Fed board, with analysts viewing him as a potential “shadow chair” who could challenge Powell’s policy direction from within.
His confirmation requires Senate approval, unlikely before September’s rate decision.
Political Pressure Mounts as Rate Cut Expectations Reach Consensus
The legal drama unfolds as 105 of 107 economists expect the Fed to cut rates by 25 basis points on September 17, marking the first easing since January.
Stalling job growth and downward revisions erasing 900,000 jobs from 12-month data drove the unanimous consensus shift.
Producer Price Index unexpectedly declined 0.1% in August against forecasts for a 0.3% increase, while weekly jobless claims spiked to 263,000, the highest since October 2021.
The combination of softer inflation and labor market weakness prompted the Fed to prioritize employment support over price stability concerns.
Trump’s frustration stems from believing current rates unnecessarily burden federal borrowing costs, arguing that Europe implemented ten rate cuts while the Fed delivered none despite similar economic conditions.
The president claims that lowering rates by one percentage point could save $300 billion annually.
Powell acknowledged at Jackson Hole that employment risks may outweigh inflation concerns, signaling the central bank’s preparation to act.
However, he stressed policy remains “data-dependent” and warned against assuming rapid easing sequences.
Bitcoin surged above $116,000 following inflation data that reinforced rate cut expectations, with spot ETFs drawing $553 million in net inflows as investors positioned for monetary accommodation.
Technical analysis reveals breakouts from descending channels, with potential targets of around $120,000.
However, recent whale selling activity poses risks to bullish projections, with an eight-year Bitcoin holder resuming liquidations after offloading $4 billion worth of BTC for Ethereum since August.
The renewed selling pressure could challenge technical targets, though a dovish Fed decision on September 17 may restore market optimism and institutional confidence.
Looking forward, the constitutional crisis over Fed independence coincides with market expectations for aggressive easing, creating massive tensions between presidential authority and central bank autonomy.
Trump is highly anticipating the May 2026 timeline for Powell’s term expiration.
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