Trump administration spending freeze will remain blocked, US appeals court says

March 26 (Reuters) - A court order blocking President Donald Trump's freeze on trillions of dollars in government financial assistance will remain in place for now, a federal appeals court said on Wednesday.

The ruling by the U.S. Court of Appeals for the First Circuit leaves in place a lower court order blocking Trump's freeze on $3 trillion in federal grants, loans and other financial aid while the government appeals.

The ruling by the court in Boston is the first time an appeals court has weighed in on the legal merits of the spending freeze, one of several marquee Trump policies held up by litigation.

U.S. District Judge John McConnell issued an injunction blocking the freeze on March 6, saying the Trump administration had overstepped its authority.

In its 48-page decision Wednesday, a panel of three appeals court judges unanimously rejected the administration's argument that McConnell's ruling was too broad.

The White House did not immediately respond to a request for comment. It could appeal the decision to the U.S. Supreme Court, where Trump's conservative allies have the majority.

The lawsuit was filed by a group of Democratic state attorneys general who said the freeze unlawfully infringed on Congress' exclusive power to dole out government funds.

McConnell, an appointee of Democratic President Barack Obama, said the Trump administration had "put itself above Congress" and undermined the separation of powers between branches of government.

In February, a judge overseeing a similar case in Washington issued a preliminary injunction that also blocked the freeze. (Reporting by Jack Queen; Editing by Leslie Adler)