Fed’s John Williams Stresses Independence as Trump Moves to Fire Lisa Cook
New York, August 27, 2025 – New York Federal Reserve President John Williams emphasized the critical importance of central bank independence in a CNBC “Squawk Box” interview on Wednesday, amid President Donald Trump’s unprecedented attempt to remove Federal Reserve Governor Lisa Cook from her position. Williams, a key figure in monetary policy as vice chair and a permanent voting member of the Federal Open Market Committee (FOMC), refrained from directly addressing Trump’s actions but underscored the Federal Reserve’s role in maintaining economic stability.
“Personally, I have worked with Lisa Cook as she’s been a member of the Board of Governors, and she’s always brought integrity and commitment to the central bank’s mission,” Williams stated. “I think Federal Reserve central bank independence is very important. … We know from history that independent central banks can deliver low inflation, economic and financial stability.”
Trump announced on Monday, August 25, 2025, via a letter posted on Truth Social, that he was firing Cook, the first Black woman to serve on the Fed’s Board of Governors, citing allegations of mortgage fraud raised by Federal Housing Finance Agency Director William Pulte. The allegations claim Cook misrepresented two properties as primary residences to secure favorable mortgage terms in 2021, before her appointment to the Fed in 2022. Trump invoked Article II of the Constitution and the Federal Reserve Act of 1913, asserting he had “sufficient cause” to remove her effective immediately.
Cook, appointed by President Joe Biden for a term extending to 2038, swiftly responded, declaring that Trump “has no authority to do so” and vowing to challenge the action in court. Her attorney, Abbe Lowell, confirmed plans to file a lawsuit, arguing that the move “lacks any factual or legal basis” and violates the Federal Reserve Act, which permits removal of governors only “for cause,” typically understood as malfeasance or dereliction of duty. Cook has not been charged with any crime, and legal experts suggest the allegations, tied to her private conduct before joining the Fed, may not meet the legal threshold for removal.
The Federal Reserve itself issued a statement defending its independence, noting that governors’ “long tenures and removal protections” are vital for ensuring monetary policy decisions are driven by data and long-term economic interests, not political pressures. The Fed pledged to abide by any court decision, signaling a looming legal battle that could reach the Supreme Court.
Williams, in his remarks, highlighted the Fed’s structural design to insulate policymakers from short-term political influence, stating, “The structure of the Federal Reserve is such that it’s designed to have independent policymakers who are making decisions; longer decisions affect the economy over the longer term, away from short-term political pressure.” He also noted the likelihood of interest rate reductions, with markets anticipating the FOMC will lower the current fed funds rate of 4.25% to 4.50% in September 2025, though he provided no specific timeline.
Trump’s move has sparked widespread concern among economists and lawmakers about the erosion of Fed independence, a cornerstone of U.S. economic stability since the 1970s inflation crisis. Peter Conti-Brown, a Fed governance expert at the University of Pennsylvania, warned that a successful ouster of Cook could mark “the end of central bank independence as we know it.” Senator Elizabeth Warren called the action an “authoritarian power grab” that violates the Federal Reserve Act, while Senate Democratic Leader Chuck Schumer stated it “shreds the independence of the Fed and puts every American’s savings and mortgage at risk.”
Financial markets have shown mixed reactions. Long-term U.S. government bond yields rose slightly on Tuesday, reflecting investor concerns about the Fed’s credibility, though the broader market response has been muted. Analysts warn that sustained attacks on the Fed could lead to higher borrowing costs and inflation if investors lose confidence in its ability to manage monetary policy independently.
The controversy comes at a delicate moment for the U.S. economy, with recent data showing slowing hiring and rising inflation pressures from Trump’s tariff policies. Federal Reserve Chair Jerome Powell, who has also faced Trump’s ire for resisting rapid rate cuts, signaled last week that the Fed might consider a modest rate reduction to address employment concerns, though he emphasized a cautious approach.
If Trump succeeds in removing Cook, he could appoint a loyalist to the Fed’s seven-member board, potentially tipping its balance toward his preference for lower interest rates. With the recent resignation of Fed Governor Adriana Kugler, Trump already has an opportunity to fill another vacancy, amplifying his influence over the central bank.
As the legal and political battle unfolds, the outcome will likely shape the future of the Federal Reserve’s autonomy and its ability to navigate the complex economic challenges ahead.