US President Donald Trump has announced he will immediately remove Federal Reserve governor Lisa Cook from her position. The decision heightens tensions with the central bank.
Trump claimed Cook submitted false information on mortgage documents and argued that constitutional authority allows him to remove her. Cook rejected the claim, insisting the president lacks the legal power to fire her. She confirmed she will not resign.
No US president has previously attempted to dismiss a Federal Reserve governor. Trump’s move follows months of criticism against the Fed and its chair Jerome Powell. He accuses Powell of refusing to lower interest rates quickly.
Cook’s role in shaping monetary policy
Cook sits on the seven-member board and participates in the twelve-member committee that sets US interest rates.
The Fed’s decisions influence borrowing costs, savings rates, and global markets. Central banks worldwide monitor US policy when adjusting their own strategies.
At the July meeting, Cook voted with Powell and most members to keep rates steady. She was appointed in 2022 by President Joe Biden, becoming the first African American woman to serve in the role.
Legal challenge anticipated
Trump’s announcement is expected to trigger legal battles. Analysts say the White House must prove in court that valid grounds exist for her dismissal.
The conflict between Trump, Cook, and Powell raises concerns about the Fed’s independence. Economists argue that central banks must remain free from political interference to protect the public interest.
Cook stated that Trump attempted to fire her “for cause,” though no legal grounds exist. She said: “I will not resign. I will continue fulfilling my responsibilities for the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, pledged to challenge the move through all legal avenues. The Federal Reserve has not yet commented.
Mortgage documents at the center
Trump announced his decision Monday night on Truth Social. He accused Cook of declaring a Michigan property as her primary residence, then making the same claim for a Georgia property two weeks later.
“It is inconceivable that you were unaware of your first commitment when making the second,” Trump wrote.
Markets respond
European markets opened lower on Tuesday following the announcement. US government bond yields also rose.
The dollar briefly weakened against major currencies before stabilizing. Julia Lee of FTSE Russell said: “The key question is whether Trump succeeds in replacing Cook. That could reshape the Fed’s balance and influence investor confidence in the US.”
Allegations tied to Trump ally
Trump had already demanded Cook’s resignation last week. His call followed a letter from housing finance regulator Bill Pulte, a Trump ally, accusing her of mortgage fraud. He urged Attorney General Pam Bondi to investigate. It is unclear whether an inquiry has begun.
Cook said in a media interview that she first learned of the allegations through press reports. They relate to a mortgage application she filed four years before joining the Federal Reserve.
“I will not step down because of claims circulating online,” she said. She added she was gathering documentation to answer legitimate questions and present the facts.
