Federal Reserve Governor Lisa Cook is preparing to file a lawsuit to block her removal by President Donald Trump, setting the stage for a legal battle over the independence of the U.S. central bank and its leadership.

Cook’s attorney, Abbe Lowell, stated on Tuesday that the president’s attempt to fire her lacks legal justification and will be challenged in court. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action,” Lowell said.

The legal threat follows Trump’s announcement that he would remove Cook from the Fed’s Board of Governors, citing alleged misconduct in mortgage documents filed before her 2022 appointment. Trump argued that discrepancies regarding the declaration of primary residence on applications in Michigan and Georgia raised questions about her integrity. “We need people that are 100 percent above board and it doesn’t seem like she was,” he told reporters.

Cook, the first Black woman to serve on the Federal Reserve Board, has refused to step down and vowed to continue performing her duties.

The Federal Reserve issued a statement emphasizing the independence of its board members, who serve 14-year terms and cannot be dismissed at will. The Fed noted that these protections exist to ensure monetary decisions are based on sound economics and long-term public interest.

This confrontation comes as Trump intensifies efforts to influence monetary policy during his second term. His administration has already made sweeping changes across federal agencies, removed thousands of civil servants, and withheld billions in approved spending.

If successful in ousting Cook, Trump would gain control over a majority of the Fed board, with two remaining seats and a pending nominee, economist Stephen Miran, still to be filled.

Market reaction to the controversy was muted. Stock indexes were flat on Tuesday, but bond yields shifted slightly, suggesting increased speculation about a possible near-term rate cut. Yields on short- and medium-term Treasury notes declined, while longer-term bonds saw modest increases—reflecting some investor concern about potential political interference in monetary policy.

Despite recent tensions, Trump signaled he would accept the outcome of the courts if they ruled in Cook’s favor. “I’ll go with what the court says,” he added.

Cook maintains that the mortgage issue arose years before her Fed appointment and does not constitute grounds for dismissal. “I have no intention of resigning,” she said earlier. “I will continue to serve in the best interest of the American economy.”