The Battle Over Independence Moves to the Judiciary

Trump announced on Monday that Cook was "dismissed immediately," citing alleged false statements in her mortgage application. According to the Federal Reserve Act, Federal Reserve governors serve 14-year terms, and the president can only remove them for "cause." How to define "cause" will become the core legal dispute.

Cook has hired Washington lawyer Abbe Lowell to represent her in litigation. Lowell stated in a declaration that Trump "has no authority to remove" Cook, adding, "His attempt to dismiss her based solely on a referral letter is without basis in fact or law. We will file a lawsuit to challenge this illegal action."

The Federal Reserve has indicated that it will not accept the president’s unilateral decision and will instead await a judicial ruling. The Department of Justice has not yet taken action against Cook, leaving her status unresolved and casting a politicized shadow over the September interest rate meeting.

Analysts Krishna Guha and Marco Casiraghi of Evercore ISI noted: "Trump’s attempt to dismiss Cook could become a turning point, gradually reshaping the Federal Reserve according to the president’s wishes." The analysts stated that by 2026, the Federal Reserve could undergo significant "Trumpification," characterized by a steeper yield curve, rising inflation compensation, and higher risk premiums.