Trump on Aug. 25 fired Federal Reserve governor Lisa Cook, an unprecedented move that brings the president one step closer to shaping the balance of the Fed's seven-member board in his favor.

In a letter shared on Truth Social, Trump claimed \\"sufficient cause\\" to remove Cook immediately, pointing to accusations that Cook made false statements on mortgage agreements.

The move comes amid Trump's monthslong efforts to influence the central bank's rate cut decisions. Trump had previously focused on pressuring Fed Chair Jerome Powell to lower rates through name-calling and termination threats, although the president has since walked back threats to remove the Fed chair.

Here's what to know:

Cook's firing escalates Trump's efforts to reshape the Fed's makeup to his liking.

Governor Adriana Kugler, another Biden appointee, announced an early resignation in August. Trump nominated Stephen Miran, who chairs the White House’s Council of Economic Advisers, to serve the roughly six months remaining of Kugler's term, although Miran has yet to be confirmed by the Senate.

The board also has two Trump-appointed board members, Michelle Bowman and Christopher Waller, both of whom have expressed support for lower rates.

Powell, who was appointed by Trump as chair in 2017 and reappointed in 2022 under former President Joe Biden, is set to end his term as chairman in May 2026, although he could serve as a governor until 2028. Cook was nominated to the Fed's board of governors by Biden, along with board members Philip Jefferson and Michael Barr.

If Miran replaces Kugler and Cook is ousted from her seat, Trump's nominees would have a majority on the seven-person board.

The board members, along with the five presidents of the regional Federal Reserve banks, make up the Federal Open Market Committee, which decides the Fed's key interest rate.

Powell had already signaled that the Fed could move toward interest rate cuts soon.

The Fed adjusts interest rates to support its dual mandate of keeping prices stable and employment high. When inflation is high, the Fed can raise rates to make borrowing more expensive and cool economic activity. When unemployment is high, cutting rates can promote economic growth and hiring.

The Fed has kept rates steady since late 2024 amid concerns that tariffs could drive up consumer prices, but that could soon change. While the Fed has yet to commit to a rate cut, Powell on Aug. 22 said \\"the balance of risks appears to be shifting\\" as the downside risks to employment rise, which \\"may warrant adjusting our policy stance.\\"

The central bank was established as an independent agency so that its decisions are based on what's best for the economy. Confidence in the Fed's autonomy could take a blow if the Fed bows down to a president's demands without a sound basis.

\\"The concern is the intent of the Trump administration: it's not to preserve Fed integrity, it's to install Trump's own people at the Fed,\\" said Kyle Rodda, senior financial market analyst at Capital.com, of Cook's firing, as reported by Reuters. \\"It goes back to trust in institutions... It's another crack in the edifice of the United States and its investibility.

Analysts say that could erode the value of the U.S. dollar, which has already grown weaker this year.

\\"The dollar continues to weaken as American governance continues to erode,\\" said Skanda Amarnath, executive director of think tank Employ America and a former Fed economist. \\"That means higher prices for all commodities.\\"

Cook has previously said she has \\"no intention of being bullied to step down.\\" After Trump asked her to resign on Aug. 20, Cook said she was gathering information to answer \\"any legitimate questions and provide the facts.\\"

Cook responded several hours later in a statement emailed to reporters through the office of lawyer Abbe Lowell, saying Trump has \\"no authority\\" to remove her, Reuters reported.

\\"I will continue to carry out my duties to help the American economy,\\" Cook said in the statement.

Lowell said Trump's \\"demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent this attempted legal action.\\"

Contributing: Reuters

This article originally appeared on USA TODAY: Trump fires Fed governor Lisa Cook. What it means.