New evidence challenges White House claims as Fed prepares key decision
U.S. President Donald Trump has appealed a court ruling blocking his attempt to remove Federal Reserve Governor Lisa Cook, setting up a high-stakes legal battle just days before a widely expected interest rate cut.
Trump Appeals Court Block
The Justice Department, representing the president, filed an appeal against a preliminary injunction issued on Sept. 9 that prevented Cook’s removal. The administration argues that removal powers granted “for cause” fall within presidential discretion and should not be subject to judicial review.
Trump initially sought to remove Cook on Aug. 25, alleging “deceitful and potentially criminal conduct” tied to mortgage agreements. Cook countered that her dismissal exceeded presidential authority and violated her due process rights.
Evidence Supports Cook’s Defense
Fresh documents appear to weaken the administration’s case. According to a May 2021 loan summary, Cook’s Atlanta property was listed as a vacation home, supporting her claim that she properly disclosed it as a second residence. This undercuts earlier allegations of misrepresentation in her mortgage applications.
Legal analysts say this evidence could shift momentum. “If these disclosures hold up, the government’s argument for ‘for cause’ removal looks substantially weaker,” one constitutional law expert noted.
Fed Independence at Stake
The confrontation has sparked debate over the independence of the Federal Reserve and the balance of presidential power. Markets are watching closely, as uncertainty about the Fed’s governance could influence investor confidence in the U.S. dollar.
Interest Rate Cut Expected
The legal drama unfolds just as the Fed prepares its September policy decision. Futures markets now price a 96.4% probability of a 25 basis point cut, bringing the federal funds rate to 4.0%–4.25%. There is also a small 3.6% chance of a larger 50 basis point cut.
Economists suggest caution in expecting an aggressive easing cycle. “Yes, you’re going to get your rate cut out there in trading land, but the data does not support three cuts this year,” said Joe Brusuelas, chief economist at RSM.
Meanwhile, speculation over Fed Chair Jerome Powell’s successor is heating up, with BlackRock executive Rick Rieder reportedly emerging as a leading contender. Powell’s term expires in May.
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