In a significant turn-up in the president’s conflict with the US central bank, Federal Reserve Governor Lisa Cook will sue to overturn her dismissal by President Donald Trump. President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” stated a statement from her attorney, Abbe David Lowell.
The president used constitutional authorities that he said gave him the right to remove Cook, stating that there was “sufficient reason” to suspect she had made fraudulent representations on her mortgage. The historic action follows Trump’s mounting pressure on the Fed, particularly its chair Jerome Powell, over what he perceives to be a resistance to interest rate cuts.
Tuesday saw a sell-off in long-dated US government securities, suggesting that investors were more concerned that Trump’s attempt to fire a Fed governor would erode trust in the central bank.
Since the Fed is used to determine the value of assets globally, a rise in borrowing costs for the US government could have repercussions if investors begin to question its legitimacy. As one of seven members of the Fed’s board of governors, Cook is a member of the 12-person committee that sets interest rates in the United States.
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