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Donald Trump said he was firing Federal Reserve governor Lisa Cook “effective immediately”, in a stunning escalation of his attacks on the US central bank.
In a letter to Cook posted on social media on Monday night, Trump said there was “sufficient reason” to believe she had made false statements on mortgage agreements, giving him cause to fire her.
The president cited his powers under the country’s constitution and US law to sack the official.
“The Federal Reserve Act provides that you may be removed, at my discretion, for cause,” Trump wrote. He has in recent days sharpened his criticism of Cook and suggested that she should be fired.
The president’s move late on Monday marks an extraordinary assault on the independence of the Fed, which sets interest rates that act as a benchmark for trillions of dollars in assets in worldwide.
The dollar weakened 0.3 per cent against a basket of its peers after Trump’s letter was posted.
The move against Cook, the first Black woman to serve on the Fed’s board of governors, follows months of escalating attacks on the central bank’s chair Jay Powell, and comes just weeks after Trump fired the head of the Bureau of Labor Statistics after a weak jobs report raised concerns about the health of the US economy.
Trump has sharply criticised Powell, calling him a “stubborn mule” for his decision to hold rates steady this year. The president also publicly scolded Powell when he visited the Fed’s headquarters in July.
Presidents have sparred with the central bank since it gained its independence from government in 1951, but the scale and vigour of Trump’s blitz against the institution is without precedent.
“This is an extraordinary act of aggression that violates the Fed’s independence,” said Eswar Prasad, a professor at Cornell University. “Trump has now declared open war on the US institutional framework, which underpins the dollar’s dominance in global finance.”
Elizabeth Warren, the top Democrat on the Senate banking committee, called Trump’s intervention “an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court”.
Trump’s previous threats to remove Powell from his post before the end of his term next year have been fiercely rejected by the central bank, which says that the White House does not have the powers to do so.
In an opinion unrelated to the central bank earlier this year, the Supreme Court also said the US president did not have the authority to remove the Fed chair or other governors.
If Cook resists Trump’s move to force her resignation, it could trigger a legal and constitutional stand-off between the White House and the Fed at a time when US central bankers are weighing a new interest rate cut as early as next month.
Legal scholars believe the administration would have to prove that there was “cause” to fire Cook by winning a case in court that proved that she had committed mortgage fraud and that this constituted gross malfeasance.
But Cook’s removal would pave the way for Trump to select a replacement governor more amenable to rate cuts. It would be his second opportunity in weeks, after Adriana Kugler announced plans to leave the central bank months before her term was set to end in January.
Trump nominated Stephen Miran, a close ally and architect of the president’s unorthodox economic positions, to take Kugler’s seat.
Should Trump obtain a majority of allies on the seven-member board, he would also be in a position to fire the heads of the 12 regional Federal Reserves.
The Fed declined to comment.
Bill Pulte, a Trump ally and head of the Federal Housing Finance Agency, last week alleged Cook had “falsified bank documents and property records to acquire more favourable loan terms” in 2021, before she was nominated to the Fed board.
He called on the Department of Justice to investigate, and the president demanded she resign in the wake of the claims. She has not yet been charged with any crime, but the DoJ called on Powell last week to remove Cook from her post.
Cook, who was nominated by Trump’s predecessor Joe Biden in 2022, has said she had “no intention of being bullied to step down” and was “gathering the accurate information to answer any legitimate questions and provide the facts”.
Pulte alleged Cook had declared in financial documents that two homes bought within weeks of each other would both be her primary residence.
Cook’s term as a Fed governor was due to finish in 2038. Powell’s term as Fed chair ends in May 2026.
Additional reporting by William Sandlund in Hong Kong