Trump's firing of a Fed director could be blocked by a US judge.

Reuters - A federal judge will assess on Friday whether to temporarily block U.S. President Donald Trump's firing of Federal Reserve Governor Lisa Cook, while she files a lawsuit alleging that Trump has no valid grounds for removing her.

The hearing scheduled for 11:00 AM (Brasilia time) before U.S. District Judge Jia Cobb in Washington is the first step in what will likely be a protracted legal battle that could end the historic independence of the U.S. central bank and will probably be resolved by the Supreme Court.

Cook sued Trump and the Fed on Thursday, saying the Republican president's baseless allegation that she engaged in mortgage fraud before taking office does not give him the legal authority to remove her and was a pretext for firing her for refusing to lower interest rates.

Concerns about the Fed's independence from the White House in setting monetary policy could have a ripple effect throughout the global economy. The dollar fell against other major currencies after Trump said he would fire Cook.

The law that created the Fed states that directors can only be removed "for cause," but it does not define the term or establish procedures for removal. No president has ever removed a Fed director, and the law has never been tested in a court of law.

Cook's emergency motion to block his removal from office pending further litigation will be taken up by Cobb, nominated by Democratic President Joe Biden.

To rule in favor of Cook, Cobb would have to conclude that the case has a chance of succeeding, that Cook would face irreparable harm if removed, and that such a decision is in the public interest.

Cook denied committing mortgage fraud, but said that even if she had, it would not be grounds for removal because the alleged conduct occurred before she was confirmed by the U.S. Senate and took office in 2022.

Trump alleges that, a year earlier, Cook described separate properties in Michigan and Georgia as her primary residences on her mortgage applications, which could have allowed her to obtain lower interest rates.

Trump administration lawyers will likely argue at Friday's hearing that the alleged mortgage fraud is sufficient grounds to remove a Fed governor, regardless of when it occurred.

Trump and William Pulte, the director of the Federal Housing Finance Agency who first raised doubts about Cook's mortgages this month, said the alleged conduct calls into question her integrity.

The government could also argue that giving Fed governors protections against removal violates the president's broad constitutional powers to control the Executive Branch, as it has done in lawsuits filed by other former officials whom Trump fired.

The case is likely to reach the U.S. Supreme Court, where a conservative majority has provisionally allowed Trump to fire officials from other agencies, despite laws protecting them from removal.

But the court, in a May ruling, distinguished the Fed from these agencies, citing its unique structure and "distinct historical tradition."