WASHINGTON — President Donald Trump on Tuesday dismissed Federal Reserve Governor Lisa Cook, an unprecedented move that immediately raised alarms about the independence of the U.S. central bank. The firing follows months of tension between the administration and the Federal Reserve over interest rate policy, inflation, and the pace of rate cuts.
The White House confirmed the decision late Tuesday, citing what it described as “a lack of alignment with the administration’s economic agenda.” Cook, who was appointed by President Joe Biden in 2022 and reappointed for a full term in 2023, had been serving a 14-year term scheduled to run until 2038.
A Rare Removal from the Fed
Unlike Cabinet positions, Federal Reserve governors traditionally cannot be removed by the president except “for cause,” such as misconduct or neglect of duty. The Federal Reserve Act was designed to protect central bankers from political interference, ensuring that monetary policy decisions are made independently from the White House.
“This is virtually unheard of,” said Sarah Binder, a political science professor at George Washington University who studies the Fed. “Removing a sitting governor because of policy disagreements undermines the very independence the institution was built on.”
The Federal Reserve declined to comment on the removal.
Trump’s Pressure on Monetary Policy
Trump has repeatedly criticized the Fed, particularly Fed Chair Jerome Powell, accusing the central bank of being too slow to cut interest rates amid signs of economic slowdown. During his first administration, Trump often pressured Powell in public speeches and social media posts, urging lower rates to boost growth.
At a press conference Tuesday, Trump defended his decision, saying Cook “was not aligned with the American people’s needs for lower interest rates and stronger job growth.” He added that the administration would “move quickly” to nominate a replacement.
“We need a Fed that works with us, not against us,” Trump said.
Reaction from Economists and Lawmakers
Economists warned that Cook’s dismissal could spook financial markets and increase uncertainty over the central bank’s independence. “This sets a very troubling precedent,” said Jason Furman, a former White House economic adviser. “Markets rely on the Fed being insulated from political pressure. If governors can be removed for their views, that credibility is at risk.”
Democratic lawmakers condemned the firing. Senator Elizabeth Warren (D-Mass.) called it “a dangerous attack on the independence of the Fed,” while Senate Banking Committee Chair Sherrod Brown (D-Ohio) said Congress would review whether the president had legal authority for such a move.
Republicans, however, were more divided. Some aligned with Trump’s stance, arguing that the Fed has been too cautious in cutting rates despite a weakening labor market. Others expressed unease at the implications for central bank autonomy.
Markets React Cautiously
The news rattled bond and currency markets, with yields on U.S. Treasuries ticking higher amid concerns that political influence could lead to more aggressive rate cuts. The U.S. dollar also weakened slightly against major currencies as investors reassessed the outlook for monetary policy.
“The credibility of U.S. monetary policy is one of its greatest strengths,” said Mark Zandi, chief economist at Moody’s Analytics. “Anything that undermines that credibility could have long-term consequences for inflation expectations and borrowing costs.”
What Comes Next
The firing raises legal questions that could end up in court. According to the Federal Reserve Act (via Federal Reserve Board), governors may only be removed “for cause.” Cook has not been accused of misconduct, and legal scholars say the White House may face lawsuits challenging the authority to dismiss her.
Meanwhile, Trump said he intends to nominate a new governor who “shares the administration’s vision for pro-growth policies.” The Senate would need to confirm the nominee, which could spark another partisan battle.
For Cook, the dismissal marks a sudden end to a historic tenure. She was the first Black woman to serve on the Federal Reserve Board and had been a leading voice on financial stability and inclusion.
As Washington braces for a legal and political fight, the move underscores the growing tension between the White House and the institution tasked with safeguarding the U.S. economy.