A U.S. appeals court has ruled that Federal Reserve Governor Lisa Cook can remain on the central bank’s board while she challenges President Donald Trump’s unprecedented attempt to remove her.

The decision by the D.C. Circuit Court of Appeals came just before the Federal Open Market Committee’s September 16–17 policy meeting, where a rate cut is expected. Cook’s attorneys argued that her sudden removal would disrupt the Fed’s operations and unsettle financial markets.

Trump dismissed Cook in August, alleging that she misrepresented mortgage documents by declaring more than one primary residence to obtain favorable loan terms. Cook, who began a 14-year term in 2023, has not been charged with wrongdoing. Documents reviewed by Reuters indicate she had listed the property in question as a “vacation home,” contradicting claims from her critics.

Federal law allows a Fed governor to be removed “for cause,” but does not define the term or outline a process for proving misconduct. Cook maintains that Trump’s allegations are a pretext to oust her for her policy views.

Since its creation in 1913, no president has attempted to fire a Federal Reserve governor. Congress designed the seven-member board to ensure monetary policy decisions remain independent of political influence.

In a 2–1 decision, Judges Brad Garcia and Michelle Childs, both Biden appointees, sided with Cook, noting that the administration failed to provide clear reasons or an opportunity for her to respond. Trump-appointed Judge Gregory Katsas dissented, arguing the president should retain broad authority to remove Fed members.

The case could head to the Supreme Court, potentially testing the limits of presidential power over the central bank.