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Judge temporarily blocks Trump from firing Fed Governor Cook Trump temporarily blocked from firing Fed governor Lisa Cook
(about 3 hours later)
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. 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. The ruling is a win for the central bank in an unprecedented legal battle with the White House over the independence of the Fed.
In August, Trump said he had sacked Ms Cook but the Fed has said she remains as a governor. Last month, Trump said he had sacked Ms Cook but the Fed 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. Judge Jia Cobb said "President Trump has not identified anything related to Cook's conduct or job performance as a board member that would indicate that she is harming the board or the public interest by executing her duties unfaithfully or ineffectively."
The Federal reserve declined to comment on the ruling but has previously said it would abide by the court's decision. The Fed 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.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. Trump has repeatedly criticised the Fed, in particular its chair Jerome Powell, for not cutting interest rates while central banks in Europe and the UK have trimmed borrowing costs.
"Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor," he added. The Fed has held off cuts while it assesses the impact of Trump's tariffs on inflation.
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. Ms Cook's lawyer Abbe David Lowell said: "This ruling recognises and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference.
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. "Governor Cook will continue to carry out her sworn duties as a Senate-confirmed board governor."
Cook has asked the court to declare Trump's firing order "unlawful and void". 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.
Trump and Federal Housing and Finance Authority director William Pulte have claimed that Ms Cook inaccurately described three different properties on mortgage applications, which may have enabled her to obtain lower interest rates and tax credits.
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.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.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. Judge Cobb wrote: "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.
"'For cause' thus does not contemplate removing an individual purely for conduct that occurred before they began in office," she added. "'For cause' thus does not contemplate removing an individual purely for conduct that occurred before they began in office."
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 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. The Fed 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.