Outlook Business Desk
US President Donald Trump has announced the removal of Federal Reserve Board Member Lisa Cook immediately, citing alleged irregularities in her mortgage documents.
Lisa Cook rejected Trump’s claims, stating he has no legal authority to fire her. She affirmed she will not resign and will continue performing her duties, underscoring the potential legal standoff with the White House over her position on the rate-setting body's board.
Trump says Cook filed conflicting mortgage papers — one for a house in Michigan and another for a house in Georgia — and claims she misrepresented her main residence. Cook, however, says the problem comes from an old loan application she made before joining the Federal Reserve.
Lisa, appointed by President Joe Biden in 2022, is the first African American woman on the Federal Reserve’s board. She serves on the 12-member committee that sets US interest rates, often voting alongside Fed Chair Jerome Powell, the head of the US central bank.
Experts say Trump’s action could trigger legal scrutiny, as the White House may need to prove “sufficient cause” in court. Cook’s lawyer emphasised that the president’s claim is without legal basis, suggesting prolonged judicial examination may be needed to resolve the dispute.
Trump has also previously criticised Fed Chair Jerome Powell for not reducing interest rates aggressively. Powell recently indicated potential September cuts but maintained central bank independence. Cook’s dismissal would intensify pressure on the Fed and could signal more White House influence over monetary policy.
Markets reacted to the news, with the US dollar weakening in Asia. Investors are concerned about potential changes to the Fed’s composition and monetary policy, including interest rate adjustments that could affect US investment attractiveness and global economic sentiment.
Julia Lee, head of client coverage at FTSE Russell, told the BBC that a key question for markets is whether Trump’s replacement of Cook could reshape the Federal Reserve’s composition and how it might affect investors’ confidence in the US.