Donald Trump 'sacks' Federal Reserve governor in fiery clash over interest rates

US Federal Reserve Governor Lisa Cook is refusing to leave her post after Donald Trump announced he would sack her on Monday. Yesterday, the US President wrote to Ms Cook to let her know he was removing her from her position "effective immediately".

In a letter shared by the White House on social media, Mr Trump said: “There is sufficient reason to believe you may have made false statements on one or more mortgage agreements.” This referred to allegations that she committed mortgage fraud.

Trump's letter alleges she misrepresented a secondary home as her primary residence in a mortgage application, a claim which was first made public by Bill Pulte, the head of the Federal Housing Finance Agency and a Trump ally.

The move has triggered fierce legal pushback and sparked alarm over the potential erosion of the central bank’s independence marking the first time in the Federal Reserve’s more than 100-year history that a sitting governor has been fired by a president.

The Harvard and Stanford-trained economist with experience in the Obama administration, has been one of several board members resistant to Trump’s repeated demands for immediate interest rate cuts. Cook's removal could therefore pave the way for Trump to nominate a replacement more aligned with his economic agenda.

Cook, the first Black woman ever appointed to the Fed’s Board of Governors, swiftly rejected the allegations and the legality of Trump’s action.

Her lawyer Abbe Lowell, released a statement asserting that "no cause exists under the law, and he has no authority" to take such action.

The statement reads: "President 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.

"We will take whatever actions are needed to prevent [Trump's] attempted illegal action."

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