US President Donald Trump has announced plans to immediately remove Federal Reserve governor Lisa Cook from office. The decision escalates his confrontation with the nation’s central bank.
Trump alleged there was “sufficient reason” to claim Cook submitted false information in mortgage paperwork. He cited constitutional authority that he argued allows him to dismiss her. Cook rejected the attempt, saying the president lacks the power to remove her. She made clear she would not resign.
No president has ever tried to dismiss a Federal Reserve governor. The move follows Trump’s increasing criticism of the central bank and its chair Jerome Powell. He accuses Powell of failing to lower interest rates quickly enough.
Cook’s influence on monetary policy
Cook is one of seven governors and sits on the twelve-member committee that decides US interest rates.
The Fed’s decisions affect borrowing costs, savings rates, and global financial markets. Central banks abroad often follow US monetary signals when shaping their own strategies.
At the July meeting, Cook sided with Powell and most members in voting to hold rates steady. She was appointed in 2022 by President Joe Biden. Cook is the first African American woman to serve in this role.
Legal showdown looming
Trump’s move is expected to lead to a legal fight. Experts believe the administration will have to prove in court that there are lawful grounds for her removal.
The conflict between Trump, Cook, and Powell raises fresh doubts about the independence of the Federal Reserve. Economists insist central banks must remain insulated from politics to serve the public good.
Cook said Trump tried to fire her “for cause,” though no such legal cause existed. She declared: “I will not resign. I will continue to fulfill my duties for the US economy, as I have since 2022.”
Her attorney, Abbe David Lowell, vowed to fight Trump’s action through every available legal channel. The Federal Reserve has not commented publicly.
Mortgage documents at the center
Trump revealed his decision late Monday on Truth Social. He accused Cook of declaring one Michigan property as her primary residence, then claiming the same 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 react
European markets opened weaker on Tuesday following the announcement. Yields on US government bonds climbed as investors reassessed risks.
The dollar initially slipped against major currencies but later stabilized. Julia Lee of FTSE Russell said: “The question is whether Trump succeeds in removing Cook. That could reshape the Fed’s structure and alter investor confidence in the US.”
Allegations trace back to Trump ally
Trump first demanded Cook’s resignation last week. His call came after housing finance regulator Bill Pulte, a close Trump supporter, accused her of mortgage fraud. He pressed Attorney General Pam Bondi to investigate. Whether any probe has begun remains unclear.
Cook told reporters last week she first learned of the accusations through media coverage. The matter relates to a mortgage application she submitted four years before joining the Fed.
“I will not allow myself to be pushed out because of unverified claims online,” she said. She added she was gathering documentation to respond to questions and establish the facts.
