US President Donald Trump has announced that he will immediately remove Federal Reserve governor Lisa Cook from office. The move dramatically escalates his confrontation with America’s central bank.
Trump alleged there was “sufficient reason” to accuse Cook of making false declarations on mortgage documents. He pointed to constitutional powers that he argued give him authority to dismiss her. Cook dismissed the claim, insisting the president has no legal power to remove her. She made clear she would not step down.
No president in US history has ever tried to fire a Federal Reserve governor. Trump’s step follows his ongoing criticism of the central bank and its chair Jerome Powell. He has repeatedly accused Powell of not cutting interest rates fast enough.
Cook’s central position on the board
Cook is one of seven governors who sit on the Federal Reserve Board. She also serves on the twelve-member committee that determines interest rate policy.
The Fed’s decisions directly affect borrowing costs, savings rates, and financial markets around the world. Global central banks often adjust their policies in response to US interest rate changes.
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 hold the role.
Legal battle expected
Trump’s decision is likely to trigger a legal fight. Analysts say the White House must show in court that a lawful basis exists for her dismissal.
The dispute between Trump, Cook, and Powell raises deeper concerns over the independence of the Federal Reserve. Economists warn that central banks must remain politically independent to act in the public interest.
Cook said Trump tried to fire her “for cause” without any legal grounds. She declared: “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, promised to use every legal tool to stop Trump’s action. The Federal Reserve itself has not commented.
Mortgage allegations at the center
Trump made his announcement Monday evening 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 did not know of your first commitment when making the second,” Trump wrote.
Market reaction to the news
European markets opened weaker on Tuesday after the announcement. Yields on US government bonds also climbed.
The US dollar briefly slipped against major currencies before regaining ground. Julia Lee of FTSE Russell stated: “The key question is whether Trump succeeds in replacing Cook. That could reshape the Fed’s composition and influence investor confidence in the US.”
Allegations trace back to Trump ally
Trump had already demanded Cook’s resignation last week. His demand followed a public letter from housing finance regulator Bill Pulte, a Trump ally, who accused her of mortgage fraud. He urged Attorney General Pam Bondi to investigate. It remains unclear whether such an investigation has begun.
Cook said in a media interview that she only learned of the accusations from press coverage. They relate to a mortgage application she submitted four years before joining the Federal Reserve.
“I will not allow myself to be forced out by online accusations,” she said. She added she was preparing the necessary documentation to answer legitimate questions and establish the facts.
