Lisa Cook can remain US central bank governor amid Trump efforts to dismiss her

A top US court has ruled that embattled Federal Reserve governor Lisa Cook can remain in her position while she fights Donald Trump’s efforts to fire her.

The federal court ruling, which will almost certainly face an appeal, is a blow to the Trump administration’s efforts to assert more control over the traditionally independent US central bank, which sets short-term interest rates to achieve its congressionally mandated goals of stable prices and maximum employment.

US congress has also sought to insulate the Fed from day-to-day politics.

District judge Jia Cobb granted Ms Cook’s request for a preliminary injunction blocking her firing while the dispute makes its way through the courts. Judge Cobb ruled that Ms Cook would likely prevail in the lawsuit she filed late last month to overturn her firing.

Mr Trump said he was firing Ms Cook on August 25 over allegations raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in 2021, before she joined the Fed.

Ms Cook is accused of saying two properties were “primary residences”, which could have resulted in lower down payments and mortgage rates than if either was designated a second home or investment property.

Judge Cobb ruled that the allegations were likely not sufficient legal cause to fire her.

Under the law governing the Fed, governors can only be removed “for cause”, which Judge Cobb said was limited to actions taken during a governor’s time in office.

The “removal of a Federal Reserve Governor extends only to concerns about the Board member’s ability to effectively and faithfully execute their statutory duties, in light of events that have occurred while they are in office”, the judge wrote.

“President Trump has not stated a legally permissible cause for Cook’s removal,” the ruling added.

The decision means Ms Cook will be able to participate in the Fed’s meeting from September 16-17, when it is expected to reduce its key short-term rate by a quarter-point to between 4% and 4.25%.

Ms Cook’s lawyer Abbe Lowell said: “Allowing the president to unlawfully remove governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law.

“Governor Cook will continue to carry out her sworn duties as a senate-confirmed board governor.”