Donald Trump’s bid to sack Federal Reserve governor Lisa Cook has triggered alarm over the independence of the US central bank, raising fears that the White House is seeking to bend monetary policy to political ends. The move, rooted in unsubstantiated claims of mortgage fraud, is being read by economists and lawmakers as part of a wider assault on institutions meant to be shielded from presidential pressure.
Trump wrote to Cook on Monday, declaring her removal “effective immediately” after one of his allies alleged that she had wrongly described a second home as her primary residence when taking out a mortgage. The president posted the full text of the letter on social media, saying he had found “sufficient cause” for dismissal.
Cook, a Biden appointee who became the first Black woman to sit on the Fed’s board in 2022, has rejected calls to quit and insisted she will respond to questions about her finances with full transparency. “I have no intention of being bullied,” she said last week.
Her ousting would hand Trump the chance to nominate a replacement and potentially secure greater sway over interest-rate policy, after months of frustration that his demands for sharp cuts have been resisted. The timing is especially sensitive, coming just as Fed Chair Jerome Powell prepares to steer rates lower while warning of the inflationary risks from Trump’s own policies, including sweeping tariffs and tighter immigration rules.
The controversy has also sharpened political fault lines. Elizabeth Warren, the Democratic senator, denounced the action as “an authoritarian power grab that blatantly violates the Federal Reserve Act”. Other critics warned of consequences for the economy and markets, with one former Fed economist arguing that the dollar’s weakness and rising commodity prices are already a sign of the damage wrought by the administration’s attacks on independent regulators.
Cook’s future now hangs on a potential legal battle. The US Supreme Court ruled earlier this year that the president lacks authority to dismiss Fed governors without cause, making Trump’s attempt highly vulnerable to challenge. But for many observers, the immediate damage is already done: the perception that the Federal Reserve itself is no longer insulated from the politics of the White House.
