Fed governor Lisa Cook breaks with the majority for the first time, backing a rate hike while Trump moves to fire her

Six days before a national midterm election, the Federal Reserve held interest rates steady. That part was expected. What nobody had penciled in was the name on the dissent line.

Fed Governor Lisa Cook voted against the hold on October 28, joining Cleveland Fed President Beth Hammack in calling for a quarter-point rate hike. It was the first time Cook had dissented on a rate decision since joining the Fed Board in 2022. According to Fortune, it also marks the first time since October 1992 that a Fed governor and a regional Fed president have both dissented in the same direction.

The timing is almost impossible to ignore. Trump has ordered Cook to appear before a newly formed White House committee investigating mortgage fraud allegations, part of his renewed effort to fire her after the Supreme Court blocked his earlier attempt, with a closed-door hearing scheduled for November 5. Her dissent landed eight days before that hearing.

What the vote means, and what it doesn't

The Fed held its benchmark interest rate at 3.75% to 4%, with Cook and Hammack dissenting in favor of a quarter-point hike. The Fed said it needs more information to determine the appropriate policy stance and described economic activity as expanding at a "strong" pace, up from "solid" in September.

Inflation reached 3.7% annually in September, with gasoline prices rising sharply amid the war with Iran. The Fed's decision to leave rates unchanged followed September's quarter-point increase, its first rate hike since 2023. Price increases are now being driven by gas and energy costs, which have been on an upward climb since the start of the war with Iran.

In a speech before the meeting, Cook pointed to inflationary pressures from the AI buildout, oil prices and supply chain disruptions associated with the Iran war, while arguing that the labor market remained strong enough to withstand higher borrowing costs. That was an argument for moving now, not waiting for December. Traders currently see an 85% chance of a December rate hike, according to CME's FedWatch tool.

Chair Kevin Warsh pushed back hard on the political read. Warsh said political considerations had no bearing on the central bank's decision. "Politics played no role in the decision. I just spent two days with my colleagues upstairs. I didn't hear an utterance about politics. I didn't hear a reference to politics, elections, what's happening in the next week," he told reporters.

Some on Wall Street are skeptical of the clean separation. Chris Rupkey, chief economist at FWDBONDS, said it is "very rare to see a Fed governor dissent" and suggested Cook's vote "could have been a protest vote as the Trump administration is taking steps to get Fed governor Cook to resign one way or another." Rupkey attributed the remark to his own analysis, not to Cook herself.

The removal fight, still live

This month, President Donald Trump renewed his push to oust Cook from the Fed board. The legal backstory is long. Trump announced he had fired Cook in August 2025 over mortgage fraud allegations. In the Federal Reserve's 112 years of operation, that was the first time a president had attempted to fire a governor.

On June 29, 2026, the Supreme Court denied the government's application and held that Cook could remain in her job while Trump's efforts to remove her were litigated. The court did not say Trump could never fire her. It held that the process the White House used was insufficient, and told the administration to develop a new one. The White House formed a committee earlier this month to do precisely that.

The committee includes White House economic adviser Kevin Hassett, acting Office of Government Ethics Director Keith Sonderling and Equal Employment Opportunity Commission Chair Andrea Lucas. The hearing will last no more than four hours, during which Cook may present evidence, witness statements and legal arguments.

Cook has said she will be unable to attend the November 5 hearing. Her lawyer, Abbe Lowell, told the White House she will be "executing her official duties as governor at financial and monetary policy meetings in Europe" that week. Lowell said the earliest Cook could appear would be after the Fed's December 8 to 9 policy meeting.

Warsh, asked directly whether the Fed would cooperate with the White House process, gave a one-line answer. "Not to my knowledge," he said.

Ed Mills, Washington policy analyst at Raymond James, told CNN that "the 5-4 Supreme Court decision did not prohibit President Trump from firing a Fed Governor, it gave him a roadmap to do it." Mills said Cook is "very clearly at risk of being fired, and it is unclear if the Supreme Court would block President Trump in Round 2."

On the same day: a Medicaid ruling out of Boston

The Fed drama was not the only major federal-policy development this week. A day later, on Thursday, October 29, a federal judge in Boston handed a significant setback to the administration's implementation of its signature domestic law.

Chronically ill people on Medicaid will not be bound by new work requirement rules that the Trump administration's guidance requires in order to qualify for "medically frail" exemptions, a federal judge ruled Thursday.

U.S. District Judge Richard Stearns in Boston gave a partial victory to a coalition of 25 states and the District of Columbia, which sued the Trump administration in June over new Centers for Medicare and Medicaid Services guidance linked to the 2025 law known as the "One Big Beautiful Bill."

Stearns found the One Big Beautiful Bill Act's definition of "medically frail" was "contrary to law." The law included a new definition that would exempt a Medicaid beneficiary from work requirements, but to qualify, a beneficiary had to establish they had a condition that "significantly" impaired their "ability to comply with the community engagement requirement."

Stearns ruled that the Centers for Medicare and Medicaid Services overstepped federal law when it narrowed who counts as "medically frail." He vacated the disputed language and issued a permanent injunction barring the federal government from enforcing it.

In his ruling, Stearns wrote that "enforcement of an unlawful definition of 'medically frail' may lead to the disenrollment of otherwise eligible vulnerable individuals relying on Medicaid coverage for continuity of care."

Stearns, an appointee of former President Bill Clinton, struck down that portion of the rule but upheld two others, including one barring states from relying on proof of patients' medical frailty that is more than 12 months old. CMS declined to comment on the ruling.

Starting January 1, 2027, the One Big Beautiful Bill Act requires many adults ages 19 to 64 covered through Medicaid expansion to work or do community service at least 80 hours a month, or attend school at least half time, to keep coverage. The ruling narrows the administration's ability to limit exemptions before that date.

Morgan Henderson, an economist who studies Medicaid at The Hilltop Institute at the University of Maryland, Baltimore County, said the ruling will likely allow some people to obtain or keep coverage. "Those individuals who would have lost coverage because they're sick but they're not quite sick enough," he said, "they might have their coverage preserved now."

What to Watch

• November 5 White House hearing: A federal judge has set a November 6 deadline for parties in the Cook removal case to propose how the litigation should proceed, one day after the scheduled White House hearing. Whether Cook attends, or whether the White House proceeds without her, will determine if the committee issues a removal recommendation before the year is out.
• December Fed meeting: In the Fed's September projections, 16 of 18 officials expected rates to be higher than current levels by year-end. Cook's dissent, Hammack's second consecutive hawkish vote, and persistent inflation above 3.5% all point toward a December hike. Whether Trump uses that meeting as another flashpoint in his public pressure campaign is an open question.
• Medicaid appeals: The administration is expected to appeal Thursday's ruling in the First Circuit. The permanent injunction covers the states that sued, leaving states that did not join the coalition still subject to the CMS rule pending further court action.
• Midterm fallout: The Fed held rates steady days ahead of midterm elections where surging inflation has been a key issue. With the election now six days out, both the rate hold and the Medicaid ruling give both parties a fresh set of economic and health-care arguments heading into the final stretch.

Sources: Federal Reserve FOMC Statement, Oct. 28, 2026; Warsh Press Conference Transcript, Federal Reserve; Axios; CNN; CNBC; Bloomberg; PBS NewsHour / AP; The Hill; NBC News / Reuters; Trump v. Cook, Supreme Court (June 29, 2026); U.S. News / Reuters; PBS NewsHour / AP; Law Commentary; MPR News / AP; American Banker