US judge temporarily halts Trump's dismissal of Fed Governor Cook

On Tuesday, a federal judge in Washington temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook from office. This dealt the White House an early setback in an unprecedented legal battle that could fundamentally challenge the independence of the Federal Reserve.

Judge Jia Cobb ruled that the allegations of mortgage fraud made by the Trump administration before Cook took office were not sufficient legal grounds for her dismissal. Cook denies any wrongdoing.

Trump attempted to dismiss Cook at the end of August, but the Fed stated that she would remain in office. Cobb's decision prevents her dismissal for the time being, as long as Cook's lawsuit is ongoing. The case is likely to end up before the Supreme Court. At its core is the question of whether the central bank can set its interest rate policy independently of political pressure – a cornerstone of any central bank's inflation control.

Trump is calling for massive interest rate cuts and attacking Fed Chairman Jerome Powell. Cook's lawyer welcomed the ruling as a clear signal to protect the independence of the central bank.

The law allows governors to be dismissed only “for cause.” Never before has a president attempted to remove a Fed governor.

(reuters, est)