US President Donald Trump has announced he will immediately remove Federal Reserve governor Lisa Cook from office. The move marks a sharp escalation in his power struggle with the central bank.
Trump said there was “sufficient reason” to accuse Cook of making false statements on mortgage agreements. He cited constitutional powers that he claimed gave him the authority to dismiss her. Cook responded firmly, saying Trump had no power to remove her. She ruled out resigning.
It is an unprecedented step for a president to seek the dismissal of a central bank governor. The move follows Trump’s growing pressure on the Federal Reserve, especially its chair Jerome Powell. Trump accuses Powell of failing to cut interest rates quickly enough.
Cook sits on the Fed’s leadership board
Cook is one of seven members of the Board of Governors. This makes her part of the twelve-member committee that sets US interest rates.
The Fed’s decisions influence how much Americans pay for loans and how much interest banks offer on savings. Central banks in other countries also closely monitor US rates when shaping their own policies.
At the most recent meeting in late July, Cook voted with Powell and the majority to keep rates unchanged. She was appointed in 2022 by Trump’s predecessor, Joe Biden. Cook is the first African American woman to hold the post.
Legal battle looms
Trump’s decision will likely spark legal challenges. Experts expect the White House will need to prove in court that sufficient grounds exist for dismissal.
The conflict between Trump, Cook, and Powell also raises questions about the Fed’s independence. Many economists stress that central banks must remain free from political interference to act in the public interest.
Cook said in a statement that Trump had tried to fire her “for cause” when no such cause existed under the law. She declared: “I will not resign. I will continue to carry out my duties for the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, vowed to take every possible legal step against Trump’s action. The Federal Reserve itself has not yet commented.
Allegations of conflicting statements
Trump announced his decision late Monday on his platform Truth Social. He accused Cook of signing a document in Michigan stating a property there would be her primary residence, then signing another in Georgia two weeks later making the same claim.
“It is inconceivable that you were not aware of your first commitment when making the second,” Trump wrote.
Market reactions
European markets opened slightly lower on Tuesday. Yields on US government bonds also rose.
The US dollar initially fell against major currencies but soon recovered. Julia Lee of FTSE Russell commented: “The key question is whether Trump can succeed in replacing Cook. If so, he could reshape the Fed’s composition and change how markets view the US as an investment destination.”
Origins of the allegations
Trump had already called for Cook’s resignation last week. His demand followed a public letter from housing finance regulator Bill Pulte, a close Trump ally. Pulte accused Cook of mortgage fraud and urged Attorney General Pam Bondi to launch an investigation. It remains unclear whether one has begun.
Cook said last week in a media interview that she first learned of the accusations from news reports. They relate to a mortgage application she made four years ago, before joining the central bank.
“I have no intention of being bullied into resigning because of questions raised in a tweet,” she stated. She added she was gathering the necessary information to answer legitimate questions and present the facts.
