A federal judge temporarily prevented President Donald Trump from dismissing the governor of the Federal Reserve, Lisa Cook, who is part of the board of directors responsible for setting American interest rates.
The decision is a victory for the central bank in an unprecedented legal battle with the White House on the independence of the Fed.
Last month, Trump said he had dismissed Ms. Cook, but the Fed said that she was staying as governor.
Justice JIA COBB said that “President Trump did not identify anything linked to Cook’s conduct or work performance as a member of the board of directors who indicates that it harms the council or to the public interest by performing its functions without opening or ineffective”.
The Fed refused to comment on the decision, but previously declared that it would respect the court’s decision.
The White House said: “This decision will not be the last word to say, and the Trump administration will continue to work to restore responsibility and trust in the Fed.”
Trump repeatedly criticized the Fed, in particular its president Jerome Powell, for not having reduced interest rates while central banks in Europe and the United Kingdom have reduced borrowing costs.
The Fed has retained the discounts while it assesses the impact of Trump’s prices on inflation.
Ms. Cook’s lawyer, Abbe David Lowell said: “This decision recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve for the illegal political interference.
“Governor Cook will continue to exercise his duties under oath as governor of the board of directors confirmed by the Senate.”
Ms. Cook continued Trump about his attempt to fire, setting up a potential legal battle with implications for the autonomy of the American Central Bank.
Trump and the director of the Federal Housing and Finance Authority, William Pulte, said that Ms. Cook had in an inaccurately described three different properties on mortgage demands, which could have enabled her to obtain interest rates and tax credits.
The law that created the Fed indicates that governors can only be deleted “for good”, but does not define what it means or how it could be done in practice.
This is the first time that a president has been trying to dismiss a governor of the Fed, and the law has not yet been tested in court.
COBB judge wrote: “The best reading of the” cause “provision is that the bases of a member of the Council of Governors are limited to reasons concerning the behavior of a governor in office and if they have faithfully and effectively executed their statutory duties.
“” For good reason “therefore does not plan to remove an individual only for the driving that occurred before starting in power.”
In response to the decision, a White House spokesman said: “President Trump legally withdrew Lisa Cook due to credible mortgage fraud allegations of his very sensitive position supervising the financial institutions of the Governors of the Federal Reserve.”
The case – which is likely to end up at the Supreme Court of the United States – is considered crucial for the central bank’s capacity to set interest rates without political influence.
The Fed should meet next week and should announce its first interest rate drop since September 2024.
