A federal judge has temporarily blocked US President Donald Trump's attempt to fire Federal Reserve governor Lisa Cook, allowing her to remain in the job for now.
The decision on Tuesday night is a blow to Mr Trump, who moved to sack Ms Cook on August 25 following allegations that she had committed mortgage fraud. She has yet to be charged with a crime and the Department of Justice opened a criminal investigation last week.
“The public interest in Federal Reserve independence weighs in favour of Cook’s reinstatement,” Judge Jia Cobb wrote in her ruling on Tuesday. The US Supreme Court is expected to have the final say.
Federal Reserve officials can only be fired "for cause”, which is most consider to be malfeasance or neglect of duty. No Fed official has been fired before Ms Cook.
“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,” Ms Cobb wrote.
Abbe Lowell, Ms Cook's lawyer, said the court's ruling upholds the Federal Reserve's independence from political interference.
“Allowing the president to unlawfully remove Ms Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law,” Mr Lowell said in a statement. “She will continue to carry out her sworn duties as a Senate-confirmed board governor.”
Ms Cook maintains she has never committed mortgage fraud. She filed a lawsuit against Mr Trump last week after he moved to fire her, arguing that he has no authority to do so.
The Federal Reserve decline to comment and has previously said it would abide by the court's decision.
The White House holds that Ms Cook was fired for cause.
"This ruling will not be the last say on the matter, and the Trump administration will continue to work to restore accountability and confidence in the Fed,” White House spokesman Kush Desai said in a statement.
Mr Trump has embarked on an unprecedented attack campaign on the Federal Reserve since returning to the White House this year, growing increasingly angry at the US Central Bank for not cutting interest rates.
Those attacks have involved repeated condemnations of Fed chair Jereme Powell a visit of the Federal Reserve's headquarters in Washington, appointing his leading economic ally to fill a vacant seat on the Fed's board of governors, and culminating in his attempt to remove Ms Cook.
The Supreme Court signalled this year that the Trump administration's reasoning for firing officials at other agencies does not apply to the Fed, although the court allowed Mr Trump earlier on Tuesday to fire the head of Federal Trade Commission.
The Federal Reserve is a quasi-private agency, meaning it is a hybrid between the private and public sector.
The rate-setting Federal Open Market Committee consists of seven members of the Fed board, including the Fed chairman, the New York Fed president, and four of the remaining 11 Fed districts who serve rotating one-year terms.
