In a stunning move that has shaken Washington and Wall Street, President Donald Trump has announced the removal of Federal Reserve governor Lisa Cook, a decision that could spark a major legal and political showdown.

Trump accused Cook of making false statements on mortgage agreements and claimed he had the constitutional authority to dismiss her. In a letter posted on his social media platform, Truth Social, the president cited documents where Cook allegedly declared two different properties as her primary residence within weeks of each other.

Cook, however, is refusing to step aside. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in a strongly worded statement. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”

Cook’s lawyer, Abbe David Lowell, described Trump’s action as “illegal” and vowed to fight it in court.

This is the first time in U.S. history that a sitting president has attempted to fire a Federal Reserve governor, a role designed to be independent of politics. The Fed, which sets U.S. interest rates, has operated free from presidential interference since 1951.

The clash comes amid rising tensions between Trump and the central bank. The president has repeatedly blasted Fed Chair Jerome Powell for not cutting interest rates fast enough, even calling him “a numbskull” and “a stubborn moron.” Powell recently signaled that a rate cut could come in September, but he also pushed back on Trump’s tariff policies, saying their inflationary effect may be temporary.

Markets were quick to react. The U.S. dollar weakened in Asian trading on Tuesday as investors speculated that a Trump-appointed replacement for Cook could push for deeper rate cuts, potentially reshaping the Fed’s policy direction.

For now, the Federal Reserve has not commented on Trump’s announcement. But if Cook continues to resist and the White House pushes forward, the standoff could become one of the most significant battles over central bank independence in modern U.S. history.