Federal Reserve Governor Lisa Cook will file a lawsuit to prevent President Donald Trump from firing her, a lawyer for the embattled central bank official said on Tuesday, kicking off what could be a protracted legal fight over the White House's effort to shape US monetary policy.

"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," Cook's lawyer, prominent Washington attorney Abbe Lowell, said in a statement.

The statement was issued a day after Trump said he would fire Cook, the first Black woman to serve on the central bank's governing body, for alleged "deceitful and potential criminal conduct" related to mortgages she took out in 2021.

Trump's attempt to remove her, unprecedented in the 111-year history of the nominally independent US Federal Reserve Board, is consistent with his style of breaking norms and prompting opponents to challenge him in court.

It follows other largely successful efforts to bring other elements of the US government under his direct control.

Since returning to office in January, the president has overseen the departure of hundreds of thousands of civil servants, dismantled several agencies and withheld billions of dollars of spending authorised by Congress.

"We need people that are 100 percent above board and it doesn't seem like she was," Trump told reporters at a meeting.

He said he had several "good people" in mind to replace Cook but would abide by any court decision that left her in her job.

Trump's intention to remove Cook was part of a bid to push forward his concept of an all-powerful executive presidency, according to RTHK's Washington correspondent, Simon Marks.

"It's absolutely adding, I think, to a short term sense of instability and concern about just how far Donald Trump intends to try and take this argument that he can literally fire a Federal Reserve Bank chairman or governor anytime he wants, and replace them with his own hand-picked successor," he told Hong Kong Today.

"This is a real challenge to the independence of the Federal Reserve and that does concern Wall Street because, of course, most market traders value the concept of an independent central bank."

Trump pressured the Fed to lower interest rates during his first term in the White House and he has escalated that campaign in recent months.

The president has demanded that rates be cut by several percentage points and threatened to fire Fed Chair Jerome Powell, although he recently backed down from that.

Cook's departure would allow Trump to pick a majority of the Fed's seven-member board, including two incumbents and the pending nomination of White House economist Stephen Miran.

Trump said he may consider Miran, whom he nominated for a temporary seat on the Fed board that is due to expire in January, for Cook's seat should it become vacant.

The Fed said in a statement that Cook and other board members serve 14-year tenures and cannot be removed easily from office, in order to ensure that monetary policy decisions are based on economic data and "the long-term interests of the American people."

Though Trump on Monday said Cook's firing was "effective immediately," the Fed's statement indicates that it sees Cook's status as unchanged.

The central bank next meets to set interest rates on September 16-17, and based on the Fed's statement it appears it would take a court ruling between now and then for her to be prevented from participating. (Reuters/RTHK)