US President Donald Trump has announced the immediate removal of Federal Reserve Governor Lisa Cook from her position, escalating tensions between the White House and the US central bank.
Trump said there was “sufficient reason” to believe that Cook had made false statements on mortgage agreements, citing constitutional powers which, according to him, give him authority to dismiss her.
In response, Cook rejected the president’s move, insisting that he lacks the authority to fire her and declaring that she would not resign. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in a statement. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Cook’s lawyer, Abbe David Lowell, also vowed to challenge the decision, saying, “We will take whatever actions are needed to prevent (Trump’s) attempted illegal action.”
The unprecedented move marks the first time a sitting US president has attempted to dismiss a Federal Reserve board member. Cook, one of seven governors on the board, also sits on the Fed’s 12-member committee responsible for setting interest rates.
She was appointed by former President Joe Biden in 2022 and is the first African American woman to hold the position. At the Fed’s last rate-setting meeting in July, Cook voted alongside Chair Jerome Powell and most other members to maintain interest rates.
Trump’s letter to Cook, posted on his Truth Social platform late Monday, accused her of providing conflicting information on two mortgage documents — one in Michigan and another in Georgia — regarding her primary residence. He argued that the contradiction undermines her credibility.
The allegations stem from a public letter sent by housing finance regulator Bill Pulte, a Trump ally, to Attorney General Pam Bondi, which referred to the matter as a “criminal referral” and called for an investigation. Cook previously said she learned of the allegations from the media and explained that the issue arose from a mortgage application she filed four years ago, before joining the central bank.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” Cook said last week, adding that she is gathering information to address any “legitimate questions” about her financial history.
The situation raises significant legal questions, with experts noting that the White House may have to defend its decision in court. If Cook or the Fed resists Trump’s order, it could trigger a standoff between the central bank and the presidency.
The Federal Reserve, which gained independence from the US government in 1951, has not yet commented on Trump’s decision.
Trump has also repeatedly criticised Chair Jerome Powell, calling him a “numbskull” and a “stubborn moron” for resisting the president’s push for steep interest rate cuts. Powell, however, recently signalled that a rate cut could be possible in September, suggesting that the impact of Trump’s tariffs on inflation may be temporary.
Markets reacted swiftly to the development, with the US dollar weakening against major global currencies during Asian trading on Tuesday. Investors are speculating that Trump’s potential replacement for Cook could shift the Fed’s stance on interest rates.
Julia Lee, head of client coverage for FTSE Russell, said: “The key question for markets is if Trump succeeds in replacing Cook, could he reshape the Fed’s composition and how would that impact the market’s perception on US investibility?”
Shoki Omori, chief strategist at Japanese bank Mizuho, also expressed concern over the mounting pressure on Powell, warning that future appointees “may just listen to whatever the White House wants,” which, he said, is “not looking good.”
Faridah Abdulkadiri
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