US President Donald Trump has announced on Monday that he will remove Federal Reserve Governor Lisa Cook from her position, a move that escalates his ongoing battle with the US central bank. In a letter shared on his social media platform, Truth Social, Trump informed Cook of her immediate dismissal from the bank’s board of governors.
The president cited “sufficient reason” to believe that Cook had made false statements related to mortgage agreements, justifying her removal based on powers granted by the Constitution, reports AP/UNB.
In response, Cook has said in a statement, “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so.”
She has refused to resign and maintains she will continue with the “duties to help the American economy”.
The Federal Reserve has yet to comment on the president’s announcement, which he made late on Monday evening. Trump’s increasing pressure on the Fed, particularly on its chair Jerome Powell, has focused on what he sees as the central bank’s reluctance to lower interest rates. Speculation about Trump possibly removing Powell has been building in recent weeks.
Cook’s dismissal is significant, as she is the first African American woman to serve on the Fed’s board of governors. Her removal is seen as unprecedented in the central bank’s 111-year history.
Legal experts believe the White House will need to justify the action by providing sufficient reason for firing her—possibly in court.
Trump’s letter claimed that Cook had signed one document in Michigan, committing to a property as her primary residence, only to sign another document weeks later for a different property in Georgia. Trump described it as “inconceivable” that Cook was not aware of her first commitment when making the second.
Earlier, Trump had publicly called for Cook’s resignation, referring to an allegation of mortgage fraud raised by Bill Pulte, a housing finance regulator and Trump ally, who had sent a letter to Attorney General Pam Bondi urging an investigation. It is unclear if any investigation has been initiated.
Cook responded to the allegations by saying she had learned of them through the media and that they were related to a mortgage loan application she made four years ago, prior to 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,” she said.
“I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
Should Cook or the Federal Reserve challenge Trump’s decision, experts warn of a potential standoff between the White House and the central bank. Since 1951, the Federal Reserve gained independence from the US government.
Trump has been particularly animus of Powell, labeling him a “numbskull” and a “stubborn moron” for failing to implement the president’s calls for rapid, large cuts to borrowing rates.
However, Powell signalled last week that an interest rate reduction is expected in September. He addressed central bankers in Jackson Hole, Wyoming, and suggested that the inflationary effects of Trump’s tariffs may be temporary.
The US dollar weakened against major currencies in Asia on Tuesday, as investors anticipated that Cook’s replacement could push for more aggressive interest rate cuts.