By Federalreserve
US President Donald Trump has declared that he will immediately remove Federal Reserve governor Lisa Cook from her post, escalating his confrontation with the nation’s central bank.
Trump asserted that there was “sufficient reason” to believe Cook had submitted false information on mortgage agreements and argued that his constitutional powers gave him the authority to dismiss her.
Cook swiftly rejected the president’s claim, insisting that he lacked any legal basis to remove her. “I will not resign,” she said in response.
The move is without precedent in modern US history, as no sitting president has attempted to dismiss a member of the Federal Reserve’s board of governors. It comes amid intensifying tensions between Trump and the Fed, particularly Chair Jerome Powell, over what the president views as resistance to lowering interest rates.
Cook is one of seven governors on the Federal Reserve Board, which collectively oversees monetary policy and sits on the 12-member Federal Open Market Committee (FOMC) that sets interest rates. Although presidents nominate candidates for the board, governors serve staggered terms meant to insulate them from political interference. Removing Cook would allow Trump to replace her with a more sympathetic appointee, potentially shifting the Fed’s approach toward interest rate cuts aligned with his economic agenda.
The Fed’s policy decisions have sweeping influence—determining the cost of borrowing for households and businesses, shaping savings rates at banks, and affecting global markets as other central banks track US monetary policy. At the Fed’s most recent policy meeting in late July, Cook sided with Powell and most colleagues in keeping rates steady.
Cook, who was appointed in 2022 by President Joe Biden, is the first Black woman to serve as a Fed governor. Trump’s bid to oust her is likely to spark a protracted legal fight. Experts have warned that the White House would have to prove in court that there was lawful cause for her removal.
The clash underscores broader concerns about the Fed’s political independence. Economists widely argue that central banks must remain insulated from partisan pressure to act in the broader economic interest.
Cook said in a statement that Trump had “purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Her attorney, Abbe David Lowell, described the president’s move as unlawful, pledging to “take whatever actions are needed to prevent [Trump’s] attempted illegal action.”
The Federal Reserve itself has yet to comment on the situation. Trump revealed his decision on Monday night through a post on his social media platform Truth Social.
In his message, Trump cited mortgage records to justify his action. He claimed Cook had signed a document declaring a Michigan property as her primary residence for one year, then two weeks later signed another attesting that a Georgia property would serve as her primary residence for the same period. “It is inconceivable that you were not aware of your first commitment when making the second,” he wrote.
Markets responded nervously to the announcement. European indexes opened lower on Tuesday, while yields on US government bonds ticked up. The dollar briefly weakened against other major currencies but later stabilized.
“[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 investability?” said Julia Lee, head of client coverage at FTSE Russell.
The controversy follows Trump’s demand last week that Cook resign over the mortgage allegations. Those claims originated in a letter from housing finance regulator Bill Pulte, a Trump ally, who addressed the allegations to Attorney General Pam Bondi. Pulte described the letter as a “criminal referral” and urged the Justice Department to investigate, though it remains unclear whether authorities have taken action.
Cook previously told the BBC she first learned of the accusations through media reports. The dispute, she said, stems from a mortgage loan application she submitted four years ago, prior to joining the Fed.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said, stressing that she was compiling the necessary documentation “to answer any legitimate questions and provide the facts.”
