Fed Governor Lisa Cook To File Lawsuit To Challenge Trump Firing

Last Updated:August 26, 2025, 21:25 IST

Lisa Cook will challenge President Donald Trump's attempt to fire her from the US Federal Reserve, calling it illegal and lacking cause, as tensions rise over Fed independence.

For months, the US leader has been calling for the bank to slash interest rates, lashing out repeatedly at Fed Chair Jerome Powell for being "too late" and calling him a "moron."

US Federal Reserve Governor Lisa Cook will be challenging President Donald Trump’s attempt to remove her from the central bank, her lawyer said Tuesday, after the US leader ramped up pressure on the institution.

“His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action," said attorney Abbe Lowell in a statement.

Trump’s move to fire Cook has marked a dramatic escalation in his effort to control the US central bank — in a step that risks the institution’s independence.

For months, the US leader has been calling for the bank to slash interest rates, lashing out repeatedly at Fed Chair Jerome Powell for being “too late" and calling him a “moron."

But policymakers have been holding rates steady as they monitor the effects of Trump’s wide-ranging tariffs on inflation.

By ousting Cook, the president could potentially add another voice to the Fed’s board, to try and shift interest rates in his favored direction.

After calling for her resignation last week, Trump posted a letter to his Truth Social platform Monday evening, saying she was fired “effective immediately."

He cited allegations of false statements on her mortgage agreements, saying: “I have determined that there is sufficient cause to remove you from your position."

But Cook on Tuesday rejected Trump’s unprecedented bid to remove her, saying he had no legal authority to do so.

“I will not resign," said Cook, the first Black woman to serve on the central bank’s board, in a statement shared with AFP.

“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so," she added.

The potential legal dispute would be the latest test of presidential powers under Trump’s new term, with the 79-year-old Republican — backed by loyalists throughout the government — forcefully moving to exert executive authority.

But even as the Supreme Court’s conservative majority recently allowed Trump to fire members of other independent government boards, it created a carveout for the Fed in its ruling.

Federal law says that Fed officials can only be removed for “cause," which could be interpreted to mean malfeasance or dereliction of duty.

Fed independence from the White House “is being eroded," said David Wessel, a senior fellow in economic studies at Brookings.

Washington D.C., United States of America (USA)

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