WASHINGTON – Federal Reserve Governor Lisa Cook has begun a standoff with Donald Trump, refusing to leave her post after Trump announced he had fired her on Monday evening.
Cook’s sacking was the first in the 111-year history of the Federal Reserve, as Trump all but guaranteed a replacement that would back the president’s calls to slash interest rates.
However, Cook released a statement on Monday night that suggested she wasn’t going anywhere.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law and he has no authority to do so,” she said. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Her Lawyer Abbe Lowell also issued a statement that slammed Trump and vowed to take action against the ‘illegal’ move.
“President Trump has once again taken to social media to ‘fire by tweet’ and once again his reflex to bully is flawed and his demands lack any proper process, basis or legal authority,” Lowell said.
“We will take whatever actions are needed to prevent his attempted illegal action.”
The president move is a sharp escalation in his battle to exert greater control over what has long been considered an institution independent from day-to-day politics.
Trump has been pushing Federal Reserve chair Jerome Powell to cut the central bank’s short-term interest rate. Firing Cook will clear the path for Trump to appoint a MAGA acolyte who can help him assert control over the institution.
He said in a letter posted on his Truth Social platform that he is firing Cook because of allegations that she committed mortgage fraud. “In light of your deceitful and potentially criminal conduct in a financial matter… I do not have such confidence in your integrity,” Trump wrote.
So far, Powell has argued that rates should stay high because inflation hasn’t come down to the two per cent target. As consumer prices remain high, he’s kept Fed interest at 4.5 per cent since December 2024.
President Trump has openly disagreed with the decision, calling for as much as a three per cent cut.
Lower rates make it cheaper for businesses to borrow money, but crucially it also cuts borrowing costs for ordinary Americans, who then have more to spend on goods and services. A higher rate can cool consumer pricing.
Trump’s decision to fire Cook is an escalation. For months, the president has been trying to cut against the Fed’s independence.
Normally, the Fed has protected itself against political pressure as it tries to maintain low inflation and high job growth across the US.
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