President Donald Trump’s attempt to reshape the Federal Reserve toward a dovish ideology that will lower interest rates was dealt a near-term blow by the nation’s highest court.

The U.S. Supreme Court ruled Monday in a 5-4 decision that Trump does not have the authority, for now, to fire Fed Governor Lisa Cook, a ruling that comes just 10 months after the president announced Cook’s termination. The court did not weigh in, though, on whether Trump had the ultimate power to remove Cook or other Federal Reserve Board members from the rate-setting Federal Open Market Committee (FOMC).

Chief Justice John Roberts issued the majority opinion rejecting the Trump administration’s claim that it had the right to fire Cook for cause without allowing her to remain in office while contesting the decision. Roberts was joined in the majority by fellow conservative Justice Brett Kavanaugh, along with three liberal justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson.

“The ultimate question of whether the president can remove Cook for cause will depend in part on the underlying facts,” Roberts wrote. “We have not addressed the facts, as they have yet to be found or analyzed under the relevant legal standards. Rather, we have simply addressed the parties’ arguments about the appropriate legal standards under which the facts must be evaluated.”

The Trump administration argued last August that Cook committed mortgage fraud by claiming two separate Michigan homes as her main residence in 2021. Cook, who was appointed by President Joe Biden to a 14-year term that expires in 2038, responded by filing a lawsuit against Trump, with then-Fed Chairman Jerome Powell also securing a preliminary injunction to keep her on the board while waging the legal battle. 

In a Truth Social post following the Supreme Court ruling, Trump signaled he will continue efforts to fire her, saying, “We will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the welfare of the United States of America!” 

Trump’s efforts to fire Cook and subsequent attempt to remove Powell as chairman prompted concerns in the commercial real estate industry about the Fed maintaining its long-standing independence when crafting monetary policies. The president appointed former Fed Governor Kevin Warsh to replace Powell in a move largely praised by the CRE market. 

“The Supreme Court’s decision ⁠to leave the lower ​court’s order in place and ​affirm the need for real process and real cause recognizes that ​Federal Reserve independence is ​essential to fulfilling the congressional mandate ‌of ⁠price stability and maximum employment,” Cook said in a statement. “I am grateful for ​this decision, ​not ⁠for my own sake, but for the ​sake of the American ​people, ⁠whose economic well-being depends on a central bank that ⁠answers ​to its mission, ​not political intimidation.”

Warsh’s first meeting leading the Fed ended with the FOMC voting unanimously to maintain the central bank’s benchmark interest rate at between 3.5 percent and 3.75 percent for the fourth straight meeting due to continued inflation uncertainty connected to the war in Iran. 

Andrew Coen can be reached at acoen@commercialobserver.com.