US President Donald Trump has announced plans to dismiss Federal Reserve governor Lisa Cook immediately. The decision marks a dramatic escalation in his clash with the central bank.
Trump alleged Cook made false claims on mortgage documents and insisted the constitution gives him authority to remove her. Cook swiftly rejected the claim, stressing that the president lacks such power. She declared she would not resign.
No American president has ever attempted to fire a Federal Reserve governor. Trump’s action comes after months of criticism of the Fed and its chair Jerome Powell, whom he blames for not cutting rates fast enough.
Cook’s standing inside the Federal Reserve
Cook sits on the seven-member board and serves on the twelve-person committee that sets US interest rates.
The Fed’s decisions shape loan costs, savings rates, and ripple across global markets. Other central banks closely watch Washington when setting policy.
In July, Cook voted with Powell and most colleagues to hold interest rates steady. She was appointed by President Joe Biden in 2022, becoming the first African American woman in the role.
Legal challenge likely
Trump’s move is expected to trigger lawsuits. Experts say the White House must convince a court that a valid legal reason exists for dismissal.
The dispute between Trump, Cook, and Powell fuels fresh debate about the Federal Reserve’s independence. Economists argue central banks must remain shielded from political interference to protect public interests.
Cook said Trump had tried to fire her “for cause” without legal grounds. She vowed: “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, said he would fight Trump’s decision through every legal channel. The Federal Reserve has not issued a response.
Mortgage allegations at the heart of dispute
Trump announced his decision Monday evening on Truth Social. He accused Cook of signing a document in Michigan listing one home as her primary residence, then signing another in Georgia two weeks later making the same claim.
“It is inconceivable you did not know of your first commitment when making the second,” Trump wrote.
Market reaction mixed
European markets opened lower on Tuesday after the announcement. Yields on US government bonds rose.
The dollar weakened against other major currencies before recovering. Julia Lee of FTSE Russell noted: “The question is whether Trump can replace Cook. Success could reshape the Fed’s balance and alter investor confidence in the US.”
Allegations linked 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 remains unclear whether a probe has begun.
Cook told reporters she first learned of the allegations from press coverage. They stem from a mortgage application filed four years before she joined the Federal Reserve.
“I will not step down because of accusations spread online,” she said. She added she was preparing documents to answer valid questions and establish the facts.
