Federal reserve governor will stay in post for now following US supreme court announcement

The US supreme court announced on Wednesday that Lisa Cook, the federal reserve governor, will stay in her post and deferred action on the Department of Justice’s request to remove her immediately in line with Donald Trump’s drive to influence the US central bank.

The country’s highest court announced it would hear oral arguments on the case in January.

Earlier in the morning the court considered the US president’s attempt to remove Cook – the first-ever bid by a president to fire a Federal Reserve official, in his unprecedented challenge to bank’s independence.

The court’s announcement means Cook will remain in the post for now. The justices declined to immediately decide a justice department request to put on hold a judge’s order temporarily blocking Trump from removing Cook, an appointee of Joe Biden, while litigation over the termination continues in a lower court.

In creating the Federal Reserve, often referred to simply as the Fed, in 1913, Congress passed a law called the Federal Reserve Act that included provisions to shield the central bank from political interference, requiring governors to be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal. The law has never been tested in court.

Jia Cobb, a Washington-based US district judge, on 9 September ruled that Trump’s claims that Cook committed mortgage fraud before taking office, which Cook denies, were probably not sufficient grounds for removal under the Federal Reserve Act.

Cook, the first Black woman to serve as a Fed governor, sued Trump in August after the president announced he would remove her. Cook has said the claims made by Trump against her did not give the president the legal authority to remove her and were a pretext to fire her for her monetary policy stance.

Reuters contributed reporting.