The Federal Reserve said Tuesday it will comply with a court ruling in the looming legal battle between President Donald Trump and Federal Reserve Governor Lisa Cook, who is challenging her dismissal from the central bank's board, The Hill reported.

This is an unprecedented clash between the White House and the Fed, intensifying Trump's efforts to reshape the institution as he pushes for lower interest rates.

Cook's attorney, Abbe David Lowell, said Trump lacks the legal power to terminate her.

"President Trump has no authority to remove Federal Reserve Governor Lisa Cook," he said in a statement.

The Fed confirmed it would respect the judiciary's determination.

"Lisa Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System," a spokesperson said. "The Federal Reserve will abide by any court decision."

Trump on Monday announced Cook's removal in a letter posted to his social media account.

"You are hereby removed from your position on the Board of Governors of the Federal Reserve, effectively immediately," he wrote.

The move followed allegations of mortgage fraud against Cook by Federal Housing Finance Agency Director Bill Pulte, who accused her of improperly designating two different dwellings as primary residences.

Pulte, a Trump ally who oversees the mortgage giants Fannie Mae and Freddie Mac, has previously accused other Democrats of fraud, including Rep. Adam Schiff of California and New York Attorney General Letitia James. Both have clashed with Trump in high-profile political and legal battles.

The firing escalates months of pressure from Trump on the central bank. The president has repeatedly demanded that the Fed cut interest rates, even as inflation has edged higher and the job market shows signs of cooling. So far, the Federal Open Market Committee has resisted his calls.

The Fed's dual mandate is to strike a balance between employment and price stability through its monetary policy. By raising rates, it curbs inflation but dampens growth. Lowering rates encourages investment and hiring, but risks overheating the economy.

Trump has not hidden his frustration with Chair Jerome Powell and other Fed officials. Beyond public criticism and social media attacks, Trump accused Powell of fraud over a cost overrun tied to a Federal Reserve site renovation. Powell dismissed the allegation in a rare joint appearance with the president.

Cook's legal challenge is expected to determine whether a president can unilaterally remove a Senate-confirmed Federal Reserve governor, a question that could have major implications for the central bank's independence.​