Fed Governor Lisa Cook Gives First Remarks Since Trump Moved To Fire Her

Federal Reserve Governor Lisa Cook said the ongoing risks for both inflation and the labor market create a teachable moment for how the Fed must proceed carefully when it comes to future interest rate cuts.

Cook — who previously taught at Michigan State University as a professor of economics and international relations — noted that it's a moment that she might tap into one day if she ever returns to the classroom.

And she cleverly noted that going back to teaching isn't something she wants to do too soon.

Cook, of course, has been in the hot seat since President Donald Trump moved in the middle of the night to fire her from the Federal Reserve in late August. Cook sued Trump, challenging his authority to fire a Fed governor. Attorney Abbe David Lowell, who is representing Cook, has said Trump's action was "illegal."

Federal Reserve Board Governor Lisa Cook speaks on "The Outlook for the Economy and Monetary Policy" at the Brookings Institution in Washington, D.C., U.S., November 3, 2025.

On Oct. 1, the U.S. Supreme Court rejected Trump's efforts to immediately remove Cook based on the Trump administration's ongoing allegations that she misrepresented information about occupancy on two mortgages she obtained in 2021, including one for an Ann Arbor home.

The Supreme Court will hear oral arguments on the case in January, a case that could set a major economic precedent when it comes to the central bank's ability to act independently from the president.

If Trump can fire Cook, what other power does a president have over other seated Fed governors? No other president has ever fired a Fed governor in the Fed's nearly 112-year history.

Cook offers a few clues after the legal battle

On Monday, Nov. 3, Cook made her first public remarks since the Trump firestorm when she gave a presentation on the economic outlook and took some limited questions at an afternoon event held by The Brookings Institution in Washington, D.C.

Cook declined to speak specifically on the topic that made her one of the most recognizable names among Fed governors. She did, though, make a few not-so-subtle remarks during a question-and-answer period.

"With respect to Fed independence," she said at one point, "I'm not going to say much but I support it."

She also expressed gratitude for the many people, including some she said were in the audience Monday, who offered her words of support.

And she gave an indication that her life has changed, saying that she's no longer able to easily go out into the community and talk directly with business owners and consumers about what they're experiencing in the economy.

In the past, Cook said, she might have slipped into a diner in Virginia to listen to conversations and understand what's going on but noted that she cannot do that anymore.

"What I want is the mortar between the bricks," Cook said.

Cook said she studies the economic data before casting her vote about whether interest rates should be reduced or raised. She tries to gather some information on her own beforehand on what people seem to be experiencing in their prospective corners of the economy.

The Federal Reserve banks across the country, she said, fill in many of those gaps by offering much research through conversations with businesses, nonprofits and others.

Eight times a year, each Federal Reserve Bank publishes a Beige Book after conducting interviews with regional business leaders and others to gather on-the-ground, real-time economic insight.

Cook voted in favor of the quarter-point rate cut announced Oct. 29, moving the target range for the federal funds rate to 3.75% to 4%.

Two Fed governors voted against the latest rate cut: Stephen Miran, who preferred a more aggressive move and wanted to lower the target range for the federal funds by a half percentage point, and Jeffrey Schmid, who preferred no change at the October meeting.

The October rate cut was the second step by the Fed in 2025 to reduce short term interest rates. On Sept.17, the Fed cut short-term rates by a quarter point to a target range of at 4% to 4.25%. The Fed board's decision wasn't unanimous in September, either.

What the Fed does in December remains unknown

The next Federal Reserve meeting is Dec. 9 and Dec. 10. More questions are being raised about what the Fed might do next.

"Every meeting, including December's, is a live meeting," Cook said.

Keeping rates too high can contribute to higher levels of unemployment; keeping rates too low can fuel inflation. The Fed remains at a crossroads.

"Looking ahead, policy is not on a predetermined path," Cook said in her prepared remarks. "We are at a moment when risks to both sides of the dual mandate are elevated."

Right now, Cook said, the labor market is showing some signs of a slowdown but there is no reason for alarm.

"The latest available indicators," she said in her remarks, "suggest that the labor market remains solid, though gradually cooling."

Yet, she noted that past experience shows the employment picture can shift suddenly and the labor market can "deteriorate very quickly."

It's a risk that the Fed must take into account when deciding how long to keep interest rates at a higher level. Rates would be kept higher in order to put a lid on inflation. The Fed has a dual mandate to promote maximum employment and price stability.

Opting to cut rates could mean that some are more worried about job market risks ahead than the threat of higher inflation.

In her speech, Cook acknowledged that it was a challenging time to offer an economic outlook due to the government shutdown.

Federal agencies that provide key economic numbers aren't producing much of the necessary data. Those agencies include the Bureau of Labor Statistics, the Census Bureau and the Bureau of Economic Analysis.

"The longer the shutdown lasts, the more data could be disrupted," she said.

Inflation could remain elevated for the next year, Cook says

When it comes to inflation, she said, much uncertainty remains about how much higher tariffs will contribute to higher prices, and inflation, down the line.

Many firms, Cook said in her speech, have not raised prices as they run down their inventories. Others say they are waiting until tariff uncertainty is resolved before hitting consumers with price increases.

"As such, I expect inflation to remain elevated for the next year," Cook said. "Nonetheless, the effect of tariffs on prices, in theory, should represent a one-time increase."

Not everyone is doing well in this economy. Cook pointed out that "there appear to be worsening outcomes for vulnerable and low-to-middle-income households."

In the labor market, she said, youth and Black unemployment rates, both of which tend to be more cyclical than total unemployment, have steadily risen since this spring through the latest readings in August.

"The deteriorating labor market experienced by these two vulnerable groups mirrors other emerging strains in some households' financial health and balance sheets," she said.

Cook said the current economic conditions are "sometimes called a 'two-speed' economy, when the well-off are doing well, while LMI (low-to-middle-income) and vulnerable households are not."

Source: Yahoo Finance