Washington DC - President Donald Trump suffered another legal setback in his bid to remove Federal Reserve Governor Lisa Cook as an appeals court blocked her dismissal on Monday.

Trump sought to oust Cook over allegations she made false statements in one or more mortgage applications, a claim she denies. A lower court in Washington had temporarily halted Trump's effort last week, and the case could now reach the Supreme Court.

Cook, who joined the Fed board in May 2022 with a term running through January 2038, denied the accusations and argued that Trump lacked authority to dismiss her. Through her lawyers, she said even if errors had been made, they related to a private mortgage years before she took office.

The lower court had ruled that the president can only dismiss a board member for valid reasons and that prior conduct before appointment does not suffice. The public interest in maintaining the Fed's independence supported Cook's reinstatement, the judge said.

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The US Court of Appeals for the District of Columbia Circuit rejected Trump's motion to overturn that ruling.

The ruling comes just hours ahead of the Federal Reserve's two-day policy meeting, expected to announce its first rate cut since December 2024. Cook is likely to participate in the meeting.

The benchmark rate has remained at 4.25 to 4.5%, a source of frustration for Trump, who has repeatedly pushed for cuts and sought the resignation of Fed chair Jerome Powell, despite the central bank's independence.