A U.S. federal judge has temporarily halted President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook, marking an early setback for the White House in an unprecedented legal battle over the central bank’s independence.
In August, Trump announced that he had fired Cook, accusing her of mortgage fraud allegations she strongly denies. The Fed, however, maintained that she remains on the board, which helps set U.S. interest rates.
District Judge Jia Cobb, in a preliminary ruling, stressed that Fed governors can only be removed “for cause,” and that such grounds relate to conduct in office, not actions alleged before appointment. The law governing the Fed does not clearly define “for cause,” leaving the issue open to interpretation.
Cook has sued Trump, asking the court to declare his order “unlawful and void.” Her lawyers welcomed the ruling as a victory for the Fed’s independence. “Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor,” her counsel, Abbe David Lowell, said.
The White House has yet to comment, while the Federal Reserve reiterated it would abide by the court’s final decision.
The case, which could ultimately reach the Supreme Court, is the first attempt by a president to fire a Fed governor. Analysts say its outcome will be critical to the central bank’s ability to make monetary policy free from political pressure.
The ruling comes as the Fed prepares to meet next week, where it is expected to announce its first interest rate cut since September 2024. Trump has repeatedly criticised the central bank’s leadership, including Chair Jerome Powell, demanding lower borrowing costs to stimulate the U.S. economy.
