President Donald Trump has filed an appeal to challenge a federal court injunction blocking his attempt to remove Federal Reserve Governor Lisa Cook, escalating a constitutional showdown over presidential removal powers just days before a critical interest rate decision. The Trump administration argues that the president's authority to remove officials "for cause" is discretionary and not subject to judicial review, claiming courts cannot second-guess such decisions involving core Article II responsibilities.
The legal battle centers on Trump's August attempt to fire Cook over alleged mortgage fraud, but newly surfaced documents from May 2021 contradict these claims, showing Cook correctly classified her Atlanta property as a second home. This evidence weakens the administration's case and supports Cook's defense that she was removed without just cause.
The timing is critical as the Federal Reserve is widely expected to cut interest rates by 25 basis points on September 17 - the first reduction since December 2024, with a 96.4% probability according to market expectations. Economic data shows stalling job growth (with downward revisions erasing 900,000 jobs from 12-month data), an unexpected 0.1% decline in the Producer Price Index for August, and jobless claims spiking to 263,000 - the highest since October 2021.
Amid this uncertainty, Bitcoin has surged above $116,000, approaching record highs as investors position for monetary accommodation. Spot Bitcoin ETFs have drawn $553 million in net inflows, though technical analysts note potential resistance from whale selling activity, including an eight-year holder who recently liquidated $136 million worth of BTC.
The controversy also involves broader Fed leadership changes, with BlackRock's Rick Rieder emerging as a potential successor to Jerome Powell (whose term expires in May 2026), and Stephen Miran - a pro-crypto advocate - nominated to the Federal Reserve Board. European Central Bank President Christine Lagarde has warned that undermining Fed independence would create "very serious danger" for global economic stability.