Source: BBC

US President Donald Trump has said he will immediately remove Federal Reserve official Lisa Cook from her position, in a major escalation in his battle against the US central bank.

He said there was “sufficient reason” to believe Cook had made false statements on mortgage agreements, and cited constitutional powers which he said allowed him to remove her.

In response, Cook said Trump had no authority to fire her and she would not resign.

It is an unprecedented move for the president to dismiss a member of the central bank’s leadership, and comes as Trump has put increasing pressure on the Fed – especially its chair Jerome Powell – over what he sees as an unwillingness to lower interest rates.

Cook is one of seven members of the Fed’s board of governors, and in this position sits on the 12-member committee which is responsible for setting interest rates in the US.

The Fed’s decision affects the rate at which Americans can borrow money as well as the savings rates on their bank accounts. US interest rates are also closely watched by central banks who set monetary policy in other countries.

Cook voted alongside Powell and most other members of the committee to maintain US interest rates at the Fed’s last rate-setting meeting at the end of July.

She was appointed by Trump’s predecessor, Democrat Joe Biden, in 2022 and is the first African American woman to serve in the role.

Trump’s decision to remove her will likely raise legal questions, with experts suggesting the White House will need to demonstrate – potentially in court – that it had sufficient reason to fire her.

The president’s conflict with Cook and Powell – whom Trump has suggested he wants to fire for not cutting interest rates fast enough – also raises questions about the Fed’s independence from politics.

Many economists believe the Fed and other central banks need independence in order to make financial policy in the public’s interest.

Cook said in a statement that Trump “purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so”.

“I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022,” she added.

Cook’s lawyer Abbe David Lowell said: “We will take whatever actions are needed to prevent [Trump’s] attempted illegal action.”

The Federal Reserve has not yet commented on the president’s announcement, which he made late on Monday via his social media platform Truth Social.

According to Trump’s post, Cook signed one document attesting that a property in Michigan would be her primary residence for the next year. 

“Two weeks later, you signed another document for a property in Georgia stating that it would be your primary residence for the next year,” the president said.

“It is inconceivable that you were not aware of your first commitment when making the second,” he wrote.