Judge temporarily blocks Trump from firing Fed Governor Cook

A federal judge has temporarily blocked President Donald Trump from sacking Federal Reserve Governor Lisa Cook, who is part of the board responsible for setting US interest rates.

It marks an early setback for the White House in an unprecedented legal battle over the independence of the central bank.

In August, Trump said he had sacked Ms Cook but the Fed has said she remains as a governor.

But the preliminary ruling does not settle the key issue of whether Trump’s allegation that Cook committed mortgage fraud before taking office, which she denies, is sufficient cause to have her removed from the role.

The Federal reserve declined to comment on the ruling but has previously said it would abide by the court’s decision.

The BBC has contacted the White House for comment.

“This ruling recognises and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Ms Cook’s counsel Abbe David Lowell said in a statement sent to the BBC.

“Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor,” he added.

Trump and Federal Housing and Finance Authority director William Pulte have said Ms Cook inaccurately described three different properties on mortgage applications, which may have enabled her to obtain lower interest rates and tax credits.

Late last month, Ms Cook sued Trump over his attempt to fire her, setting up a potential legal battle with implications for the US central bank’s autonomy.

Cook has asked the court to declare Trump’s firing order “unlawful and void”.

The law that created the Fed says governors can only be removed “for cause,” but does not define what that means or how that could be done in practice.

It is the first time that a president has tried to fire a Fed governor, and the law has yet to be tested in court.

“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behaviour in office and whether they have been faithfully and effectively executing their statutory duties,” District Judge Jia Cobb wrote in the preliminary ruling.

“‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office,” she added.

The case, which is likely to end up in the US Supreme Court, is seen as crucial to the central bank’s ability to set interest rates without political influence.

The ruling on Tuesday came as the central bank is due to meet next week and is expected to announce its first interest rate cut since September 2024.

Trump has repeatedly criticised the Fed’s leadership, including chair Jerome Powell, and called on it to cut borrowing costs to help boost the US economy.