PUBLISHED ONAugust 26, 2025 6:00 AMBYSean LerJust over three weeks after US President Donald Trump fired the Labour Department's Bureau of Labour Statistics (BLS) commissioner Erika McEntarfer on Aug 1, the president said he has sacked Federal Reserve Governor Lisa Cook.
Both women were nominated by former US President Joe Biden.
Trump claimed that McEntarfer had faked job numbers after BLS published data showing weaker-than-expected employment growth in July. There is no evidence to back Trump's claims of data manipulation.
This time, Trump said that he had "sufficient reason" to remove Dr Cook over alleged improprieties in obtaining mortgage loans in 2021, when she was an academic.
"You signed one document attesting that a property in Michigan would be your primary residence for the next year.
"Two weeks later, you signed another document in a property in Georgia stating that it would be your primary residence for the next year. It is inconceivable that you were not aware of your commitment when making the second. It is impossible that you intended to honour both," said Trump in his official letter to Dr Cook posted on Truth Social.
Citing the need for the American people to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Fed, Trump said that the "deceitful and potentially criminal" conduct by Dr Cook meant he could not have such confidence.
He added that even if otherwise, the conduct demonstrated gross negligence in financial transactions which raises questions on her competence and trustworthiness as a financial regulator.
Reuters reported Dr Cook as saying that "no causes exist under the law, and he (Trump) has no authority" to remove her from the job she was appointed to by Biden, adding that she will "continue to carry out my duties to help the American economy".
The statement was reportedly emailed to reporters through lawyer Abbe Lowell who said that Trump's "demands lack any proper process, basis or legal authority", reported Reuters.
The terms of Fed governors are structured such that they outlast the term of a given president. In Dr Cook's case, her tenure would have lasted until 2038. Nonetheless, the Federal Reserve Act does provide for the removal of a sitting governor "for cause".
This has never been tested by presidents, who particularly since the 1970s have largely taken a hands-off approach to Fed matters as a way to ensure confidence in the US monetary policy.
Following news on the firing, the US dollar softened across the board, while the short-end Treasury yields fell in Asian hours on Tuesday morning (Aug 26), with speculations that Dr Cook's replacement would be a dovish one who would push for more rate cuts.
Saxo's chief investment strategist in Singapore Charu Chanana told Reuters that markets are not panicking yet, but recalibrating.
"Earlier rate cuts look more likely after Dr Cook's removal," he added.
Trump has repeatedly berated Fed chairman Jerome Powell over his reluctance to lower interest rates.
Powell's term will end in a little under nine months.
The seven-member board currently includes Christopher Waller, named in Trump's first term, and the pending nomination of Council of Economic Advisers chief Stephen Miran.
If Miran is confirmed by the Senate, coupled with Dr Cook's replacement and Powell's successor, Trump would have more than half of the governors on the board nominated by him from his first and second terms.
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