US President Donald Trump has announced he will immediately remove Federal Reserve governor Lisa Cook from her position. The move heightens tensions with the central bank.
Trump alleged Cook provided false information on mortgage documents and argued that constitutional powers allow him to dismiss her. Cook rejected the claim, insisting the president lacks the legal authority to fire her. She confirmed she will not resign.
No US president has previously attempted to remove a Federal Reserve governor. Trump’s action follows months of criticism toward the Fed and its chair Jerome Powell. He accuses Powell of refusing to lower interest rates quickly.
Cook’s pivotal role at the Fed
Cook sits on the seven-member board and serves on the twelve-member committee that sets US interest rates.
The Fed’s policies affect borrowing costs, savings rates, and global markets. Central banks worldwide monitor US policy when shaping their own strategies.
At the July meeting, Cook voted with Powell and most members to hold rates steady. She was appointed in 2022 by President Joe Biden, becoming the first African American woman to serve in the role.
Legal battle anticipated
Trump’s announcement is expected to trigger legal challenges. Experts say the White House must prove in court that valid grounds exist for her dismissal.
The conflict between Trump, Cook, and Powell raises questions about the Fed’s independence. Economists warn central banks must remain free from political influence to serve the public interest.
Cook said Trump tried to fire her “for cause,” though no legal basis exists. She stated: “I will not resign. I will continue to carry out my responsibilities for the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, pledged to fight the move through all legal avenues. The Federal Reserve has not issued a public comment.
Mortgage documents in dispute
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.
Market reaction
European markets opened lower on Tuesday after the announcement. Yields on US government bonds 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 affect 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 any inquiry has begun.
Cook said in a media interview that she first learned of the allegations through press reports. They stem from 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 documents to respond to legitimate questions and present the facts.
