Lisa Cook will participate in the Federal Open Market Committee meeting on September 16-17. A U.S. appeals court has denied former President Trump’s attempt to remove Federal Reserve Governor Lisa Cook. **The Court’s Decision** The court also rejected a request from the Justice Department to stop a prior ruling that prevents Trump from dismissing her. This ruling allows Cook to attend the Fed’s policy meeting. The decision was made with a 2 – 1 vote in favor of Cook. Trump can still appeal to the Supreme Court, but he would need a speedy decision. With Lisa Cook confirmed to attend today’s FOMC meeting, a major source of political uncertainty regarding interest rate decisions has been cleared. This reduces the likelihood of an unexpected hawkish outcome this week. Derivative markets are already reacting, with implied volatility on short-term rate futures slightly decreasing following this news. Her vote matters because she represents a dovish perspective that prioritizes the dual goals of employment and inflation. Recent data from August 2025 shows unemployment rising to 4.1% and core inflation moderating to 2.6%. Her presence at the meeting strengthens the argument for keeping rates steady. This increases the chances that the Fed will maintain the current policy rate tomorrow, even if the accompanying statement remains strong. **Trading Implications** For traders, this indicates that selling premium on out-of-the-money options—those that would benefit from a rate hike—may be a smart strategy. We are seeing a decline in the cost of protection against an unexpected hawkish stance. The focus has now shifted from the risk of a rate hike to the Fed’s forward guidance for the rest of 2025. Looking back, similar political pressures faced the Fed in the late 2010s, often leading to increased market volatility as concerns about the central bank’s independence grew. While this court ruling brings clarity for now, the possibility of a Supreme Court appeal means political risks will remain. This ongoing uncertainty suggests that holding some longer-dated volatility positions could be wise. The immediate effect on equity derivatives is likely to be a modest calming, especially for interest-sensitive technology and growth stocks. The risk of a hawkish policy error this week is now considered lower, which could lead to a rally if the Fed opts to hold rates. As a result, positions that benefit from range-bound trading in major indices like the S&P 500 are looking more appealing. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now