US President Donald Trump has announced he will immediately dismiss Federal Reserve governor Lisa Cook. The decision escalates his ongoing confrontation with the central bank.
Trump alleged Cook submitted false information on mortgage documents and argued that constitutional powers give him the authority to remove her. Cook rejected the claim, insisting the president has no legal right to fire her. She confirmed she will not resign.
No US president has ever attempted to dismiss a Federal Reserve governor. Trump’s action follows months of criticism of the Fed and its chair Jerome Powell. He accuses Powell of refusing to lower interest rates quickly.
Cook’s role in US monetary policy
Cook serves on the seven-member board and sits on the twelve-member committee that sets US interest rates.
The Fed’s decisions influence borrowing costs, bank savings rates, and global financial markets. Central banks worldwide monitor US policy when adjusting their own strategies.
At the July meeting, Cook voted with Powell and most members to maintain rates. She was appointed in 2022 by President Joe Biden, becoming the first African American woman to serve in the role.
Legal challenges expected
Trump’s announcement is likely to trigger legal battles. Analysts say the White House must prove in court that valid grounds exist for her dismissal.
The dispute between Trump, Cook, and Powell raises questions about the Fed’s independence. Economists argue central banks must remain free from political influence to serve the public interest.
Cook said Trump attempted to fire her “for cause,” though no legal basis exists. She stated: “I will not resign. I will continue fulfilling my responsibilities for the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, pledged to fight the move through all legal channels. The Federal Reserve has not issued a public comment.
Mortgage filings under scrutiny
Trump announced his decision Monday night on Truth Social. He accused Cook of declaring a Michigan property as her primary residence, then making the same claim for a Georgia property two weeks later.
“It is inconceivable that you were unaware of your first commitment when making the second,” Trump wrote.
Market impact
European markets opened lower on Tuesday after the announcement. US government bond yields also rose.
The dollar briefly weakened against major currencies before stabilizing. Julia Lee of FTSE Russell said: “The key question is whether Trump succeeds in replacing Cook. That could reshape the Fed’s balance and affect 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 is unclear whether an inquiry has begun.
Cook said in a media interview that she first learned of the allegations through press reports. They stem from a mortgage application she submitted four years before joining the Federal Reserve.
“I will not step down because of claims circulating online,” she said. She added she was gathering documents to answer legitimate questions and provide the facts.
