By Howard Schneider and Ann Saphir
(Reuters) -Federal Reserve Governor Lisa Cook, whose removal is being sought by President Donald Trump over allegations of misstatements on her mortgages, will seek court approval for her continued right to carry on in her role at the U.S. central bank, the Fed said on Tuesday.
“Lisa Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System,” a Fed spokesperson said. “As always, the Federal Reserve will abide by any court decision.”
The Fed next meets to set interest rates on September 16-17, and Trump has been pressuring the central bank to lower interest rates dramatically. The Fed may well cut its benchmark interest rate at that meeting, delivering a policy action at least in the direction Trump has demanded even as he stokes a potential crisis over the Fed’s standing.
In her time on the board, Cook has voted with the majority when the Fed was raising rates to battle inflation, to cut them last year in moves made before and after Trump’s election, and to hold borrowing costs steady since December. She has issued no dissents.
Trump on Monday said Cook’s firing was “effective immediately” and on Tuesday said he has somebody in mind as her replacement.
The Fed’s statement indicates that from the U.S. central bank’s view, Cook’s status as a governor has not changed, and that it would take a court ruling between now and the upcoming meeting for her to be prevented from participating.
Her lawyer Abbe Lowell has pledged to file litigation on her behalf against the firing. The Justice Department has not filed charges or taken any steps against her.
The Federal Reserve Act sets 14-year terms for Fed governors and specifies that they may be removed by the president only for “cause.”
“Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people,” the Fed spokesperson said. “The Federal Reserve will continue to carry out its duties as established by law.”
(Reporting by Ann Saphir, Editing by Franklin Paul, Chizu Nomiyama and Andrea Ricci)
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