President Donald Trump has demanded the removal of one of the governors of the US central bank, a move that escalates his long-running feud with the institution.
Late on Monday, he posted on his Truth Social account a letter addressed to Lisa Cook, saying she was being removed from the Federal Reserve Board of Governors due to mortgage fraud allegations.
The move has caused an outcry from Democrats who say it amounts to unprecedented political interference.
Who is Lisa Cook and what does she do?
Ms. Cook was appointed as governor of the Federal Reserve in 2022 by Democratic President Joe Biden, becoming the first African American to serve in the role. Her term was due to end in 2038.
She previously served on President Barack Obama's Council of Economic Advisers and worked at the US Treasury.
There are seven governors on the board of the Fed, and they play a key role in setting the monetary policy of the US.
Ms. Cook has voted recently to keep interest rates on hold.
What has Trump accused Lisa Cook of?
In his Truth Social post, the president cited allegations that Ms. Cook may have falsified records to obtain a mortgage. He asserted she signed two documents, two weeks apart, claiming both homes in different states were her primary residence.
She has not been charged with any wrongdoing and maintains that she intends to fight her dismissal.
What does the Fed do?
The Federal Reserve is responsible for the nation's monetary policy, promoting stability in the financial system, and regulating financial institutions. Its major task is setting interest rates which significantly influence borrowing costs across the nation.
Can Trump actually fire her?
This scenario could spark a legal battle. The Federal Reserve Act does not permit the president to remove Fed officials at will but allows dismissals 'for cause.' However, legal experts have raised questions about the validity of Trump's claims against her.
Market reactions have been muted as investors await the outcome of this unfolding situation.
Why does Trump want lower interest rates?
Trump is under pressure to lower interest rates to ease borrowing costs and stimulate economic growth. However, a delicate balance must be maintained, as higher rates help manage inflation—another critical focus for the president.
