Lisa Cook will attend the Federal Open Market Committee meeting on September 16-17. A U.S. appeals court has turned down Trump’s effort to dismiss Federal Reserve Governor Lisa Cook.
The Court’s Decision
The court also refused a Justice Department request to halt a previous ruling preventing Trump from removing her. This decision allows Cook to be part of the Fed’s policy meeting.
The ruling was in Cook’s favour, with a 2 – 1 vote. Trump still has the option to appeal to the Supreme Court, but it would require a swift decision.
With Lisa Cook’s attendance at today’s FOMC meeting now confirmed, a key piece of political uncertainty has been removed from the immediate interest rate decision. We see this as reducing the odds of an unexpected hawkish outcome this week. Derivative markets are already adjusting, with implied volatility on short-term rate futures ticking down slightly on the news.
Her vote is critical, as she represents a more dovish viewpoint focused on the dual mandate of employment and inflation. Given that the latest data from August 2025 showed unemployment rising to 4.1% while core inflation has moderated to 2.6%, her presence strengthens the case for holding rates steady. This tilts the odds toward the Fed maintaining the current policy rate tomorrow, even if the accompanying statement remains firm.
Trading Implications
For traders, this suggests that selling premium on out-of-the-money options that would profit from a rate hike may be a prudent strategy. We are observing a decrease in the cost of protection against a hawkish surprise. The focus now shifts from the risk of an immediate hike to the tone of the Fed’s forward guidance for the rest of 2025.
Looking back, we saw similar political pressure on the Fed in the late 2010s, which often led to increased volatility as the market questioned the central bank’s independence. While this court ruling provides clarity for now, the possibility of a Supreme Court appeal means this theme of political risk will not disappear. This lingering uncertainty suggests holding some longer-dated volatility positions could be beneficial.
The immediate impact on equity derivatives should be a modest calming effect, particularly for rate-sensitive technology and growth stocks. The chance of a hawkish policy error this week is now viewed as lower, which could support a rally if the Fed delivers the expected hold. Consequently, positions that benefit from range-bound trading in major indices like the S&P 500 are becoming more attractive.
