US President Donald Trump has announced plans to dismiss Federal Reserve governor Lisa Cook immediately. The decision marks a sharp escalation in his conflict with the central bank.
Trump argued there was “sufficient reason” to accuse Cook of providing false information in mortgage filings. He cited constitutional powers that he claimed allow him to act. Cook rejected the order, saying the president has no legal authority to remove her. She stressed she would not resign.
No president has ever attempted to fire a Federal Reserve governor. Trump’s move follows his criticism of the bank and its chair Jerome Powell. He accuses Powell of refusing to lower interest rates as quickly as he wants.
Cook’s important position at the Fed
Cook serves on the seven-member Board of Governors and sits on the twelve-member committee that sets interest rates.
The Fed’s decisions shape borrowing costs for households and businesses, bank savings rates, and global financial markets. Other central banks watch US moves closely when adjusting their own policies.
At the July meeting, Cook voted with Powell and most members to keep interest rates unchanged. She was appointed in 2022 by President Joe Biden, becoming the first African American woman to hold the position.
Legal fight expected
Trump’s announcement is likely to trigger legal challenges. Experts say the White House will need to prove in court that valid grounds exist for her dismissal.
The confrontation between Trump, Cook, and Powell raises broader questions about the independence of the Federal Reserve. Economists argue central banks must remain free from political pressure to protect the public interest.
Cook stated that Trump had tried to remove her “for cause,” though no legal basis exists. She said: “I will not resign. I will continue to carry out my responsibilities for the American economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, promised to challenge Trump’s action through every legal channel available. The Federal Reserve has not yet issued a response.
Mortgage controversy at the center
Trump announced his decision Monday night on Truth Social. He accused Cook of signing a document in Michigan declaring a property as her primary residence, then signing another in Georgia two weeks later making the same claim.
“It is inconceivable that you did not know of your first commitment when making the second,” Trump wrote.
Markets react cautiously
European stock markets opened lower on Tuesday after the announcement. Yields on US government bonds also rose.
The dollar briefly weakened against other major currencies before recovering. Julia Lee of FTSE Russell said: “The key question is whether Trump succeeds in replacing Cook. That could reshape the Fed’s structure and influence global investor confidence in the US.”
Allegations tied to Trump ally
Trump had already called for Cook’s resignation last week. His demand followed a letter from housing finance regulator Bill Pulte, a close Trump 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 reports. They relate to a mortgage application she submitted four years before joining the Federal Reserve.
“I will not step down because of accusations spread online,” she insisted. She added she was gathering documentation to answer legitimate questions and establish the facts.
