(NewsNation) — A legal battle has begun that will determine the future of how the Federal Reserve operates.
Federal Reserve Governor Lisa Cook is suing the Trump administration over her recent firing and has asked a federal judge to block the decision.
President Donald Trump announced Cook would be removed from her role for “deceitful and potentially criminal conduct” last week.
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The announcement came after Bill Pulte, a Trump appointee who heads the Federal Housing Finance Agency, accused Cook of mortgage fraud. He alleged she claimed two primary residences to get better mortgage rates.
Cook’s legal team has pushed back, writing in a court filing that “the mortgage allegations against her are pretextual in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Fed.”
The Fed sets interest rates for the country, and Trump has been pushing the agency to lower interest rates despite the economy’s failure to meet the Fed’s 2% goal of inflation.
Fed chair Jerome Powell has refused Trump’s demands, keeping interest rates steady to combat inflation, though he has suggested rates could be lowered in the future. He has pointed to economic uncertainty from Trump’s sweeping tariffs as a reason against lowering rates.
Earlier this week, the president appeared to be gearing up for a legal battle over Cook’s dismissal.
“You have these mortgage receipts very clearly shown to the president, and he has the cause that he needs to fire this individual,” said White House press secretary Karoline Leavitt. “He laid it out in a letter that he provided to her and to the public as well, and so we’ll continue to fight this battle.”
Cook’s legal team has said she did not commit any misconduct.
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As tension grows between Trump and the Fed, the president has said he would only appoint Federal Reserve leaders who support lowering interest rates.
He recently appointed a former top White House economic adviser to replace an outgoing Fed governor who left earlier in the month.
