A United States appeals court has ruled that Lisa Cook, a governor on the Federal Reserve’s board, can remain in her post for now, dealing a blow to President Donald Trump’s efforts to remove her over unproven allegations of mortgage fraud.

The decision, delivered late on Monday by the US Court of Appeals for the District of Columbia Circuit, means Cook will participate in this week’s key policy meeting, where the central bank is expected to cut interest rates.

The legal dispute marks the first time in the Federal Reserve’s 111-year history that a president has sought to dismiss a sitting governor. Trump’s administration argued it had broad discretion to remove Fed governors, but the court found Cook’s claim that she was denied due process had a “strong likelihood of success”. Circuit Judge Bradley Garcia, writing for the majority, stated, “Before this court, the government does not dispute that it provided Cook no meaningful notice or opportunity to respond to the allegations against her”.

Cook, the first Black woman to serve on the Fed’s board, has consistently denied any wrongdoing. The allegations centre on claims that she misrepresented the status of properties on mortgage applications, which could have resulted in more favourable loan terms. However, documents reviewed by Reuters indicate that Cook declared her Atlanta property as a “vacation home” during the loan process, a detail that appears to undercut the accusations. Additionally, property tax authorities in Ann Arbor, Michigan, confirmed that Cook had not broken rules regarding tax breaks for her primary residence.

The Trump administration’s attempt to remove Cook has raised concerns about the independence of the Federal Reserve. Under the law that established the central bank, governors can only be removed “for cause”, a term that remains undefined and untested in court. The Fed itself has not taken a side in the legal battle, stating it will abide by the court’s decision.

In a separate development, the US Senate narrowly confirmed Stephen Miran, chair of Trump’s Council of Economic Advisers, to a vacant seat on the Fed’s board. Miran’s appointment has drawn scrutiny, as he will remain on unpaid leave from his White House role rather than resigning, prompting questions about the central bank’s independence.

The court’s decision allows Cook to continue her work as the Federal Reserve prepares to announce its latest interest rate decision on Wednesday.

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