President Donald Trump has fired Federal Reserve Chair Lisa Cook, a historic and controversial move that tests the limits of central bank independence. The decision follows a Supreme Court ruling that narrowed the president's authority to remove Fed officials.
Background of the Firing
The White House announced the dismissal on Friday, citing the recent Supreme Court decision that held that the president does not have unrestricted power to fire members of independent agencies like the Federal Reserve. The ruling, which was seen as a victory for executive power but a blow to the Fed's autonomy, allowed for the removal under certain conditions.
Lisa Cook, who was appointed by President Biden in 2022, became the first Black woman to serve as Fed chair in 2025. Her term was not set to expire until 2028, making the firing unprecedented in modern history.
Reaction and Implications
The move has sparked immediate criticism from economists and lawmakers who argue it undermines the Fed's ability to make monetary policy without political interference. Stock futures fell sharply following the announcement, and the dollar weakened against major currencies.
In a statement, the Federal Reserve said it would not comment on the personnel decision, but emphasized its commitment to its dual mandate of price stability and maximum employment. The Treasury Department has not yet indicated who will serve as interim chair.
Legal experts note that the Supreme Court's ruling, which was decided in June, allowed for the removal of Fed officials but set a high bar, requiring proof of neglect of duty or malfeasance. The White House has not provided specific reasons for the firing beyond the ruling.
This is the first time a sitting president has removed a Federal Reserve chair, and it raises questions about the future of U.S. monetary policy and the central bank's credibility on the global stage.
