Fired Fed Governor: I'm Not Leaving

Let the legal fight begin: After President Trump informed Federal Reserve governor Lisa Cook on Monday night that he was firing her, Cook has responded by saying she's not going anywhere.

• "President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so," said Cook through a spokeswoman, per the Washington Post. "I'll continue to carry out my duties to help the American economy as I have been doing since 2022."
• A CNN review of mortgage documents shows Cook did indeed take out mortgages for two properties and listed both as her principal residence, which Trump has cited as the reason for the firing. CNN adds that it's not clear whether Cook did so in error, though she has promised to explain. Mortgage filings have become a new weapon for the Trump administration against adversaries, the Post notes in a separate story.

• If Trump is able to remove Cook and replace her with his own pick, it clears the way for him to have four of the seven Fed board members on his side when it comes to cutting interest rates. He could thus "influence the direction and level of interest rates for the rest of his term," notes the Wall Street Journal. "The immediate effect of cuts could be a boost to spending and growth. But the longer-term risk is higher inflation if Trump's appointees go on to hold rates lower than economic conditions warrant."
• Reuters rounds up reaction of financial analysts, including that of Thomas Matthews of Wellington Management. "Right now Trump is pressuring the Fed to do something that it was probably going to do anyway, which is cut rates," he says. "The real drama might come if he continues to apply pressure once the easing cycle is clearly finished. And, even though the market reaction has been reasonably muted so far, it does provide a bit of a clue as to how that might play out: a steeper curve with long-end yields higher, if anything, and a weaker (US dollar)."