US President Donald Trump has declared he will remove Federal Reserve governor Lisa Cook from office immediately. The move escalates his battle with the central bank to new levels.
Trump argued there was “sufficient reason” to accuse Cook of submitting false mortgage information. He cited constitutional authority he claimed empowered him to act. Cook rejected the decision, insisting the president lacked the power to dismiss her. She vowed she would not resign.
No president has ever attempted to fire a Federal Reserve governor. Trump’s step follows his repeated attacks on the bank and its chair Jerome Powell. He has long accused Powell of refusing to cut interest rates fast enough.
Cook’s role in shaping US policy
Cook is one of seven governors and a member of the twelve-person committee that sets US interest rates.
The Fed’s decisions affect loan costs for Americans, savings rates in banks, and global financial markets. Central banks worldwide often follow US policies when adjusting their own monetary strategies.
At the July meeting, Cook voted with Powell and the majority to keep rates steady. She was appointed in 2022 by President Joe Biden, becoming the first African American woman to hold the position.
Legal clash looming
Trump’s announcement is expected to lead to a courtroom confrontation. Legal experts say the administration must prove valid grounds for dismissal.
The dispute between Trump, Cook, and Powell fuels fresh concerns about the independence of the Federal Reserve. Economists stress that central banks must stay free from political interference to act in the public interest.
Cook said Trump had attempted to remove her “for cause,” though no legal grounds existed. She stated: “I will not resign. I will continue to serve the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, pledged to fight Trump’s action through every legal channel. The Federal Reserve has not issued a response.
Mortgage filings under fire
Trump announced his decision Monday night on Truth Social. He accused Cook of declaring a Michigan property as her main residence, then making the same claim for a Georgia home two weeks later.
“It is inconceivable that you were unaware of your first commitment when making the second,” Trump wrote.
Financial markets unsettled
European stock markets opened lower on Tuesday following the announcement. Yields on US government bonds also increased.
The dollar weakened briefly against major currencies before recovering. Julia Lee of FTSE Russell said: “The key question is whether Trump succeeds in replacing Cook. That could shift the Fed’s balance and alter investor confidence in the US.”
Allegations linked to Trump ally
Trump had already demanded Cook’s resignation the previous week. His call followed a letter from housing finance regulator Bill Pulte, a close ally, who accused her of mortgage fraud. He urged Attorney General Pam Bondi to investigate. It is unclear if an inquiry has started.
Cook said in a media interview that she first learned of the allegations from press coverage. They relate to a mortgage application she filed four years before joining the Federal Reserve.
“I will not be pushed out by accusations spread online,” she said. She added she was gathering records to address legitimate questions and present the facts.
