Fed: Kugler has submitted resignation to Trump

Fed: Kugler has submitted resignation to Trump

Federal Reserve governor Adriana Kugler has unexpectedly submitted her resignation, creating an early vacancy on the central bank's powerful board of governors. This move, which comes as President Donald Trump continues to push for lower interest rates, could significantly impact the Fed's policymaking balance [1].

Kugler, a labor economist, was nominated by President Biden and confirmed in 2023. Her term was set to expire at the end of January. Although governors are appointed to 14-year terms, early departures are not uncommon. Kugler's resignation opens a slot that could shift the Fed's leadership in favor of Trump's policies [1].

Trump has been vocal about his desire for the Fed to lower interest rates, arguing that it would boost economic growth and reduce debt servicing costs. However, Fed Chair Jerome Powell has held the benchmark rate constant this year, citing the need to assess the impact of Trump's tariffs on inflation [2]. Kugler's departure gives Trump an opportunity to appoint a new governor who may align more closely with his economic agenda.

The resignation also comes amidst growing dissent within the Fed's ranks. Governors Christopher Waller and Michelle Bowman have dissented at recent meetings, pushing for slight rate cuts despite Powell's cautious stance [3]. This internal division could intensify if Trump appoints a replacement for Kugler who advocates for more aggressive rate cuts.

The Fed's decision to leave rates unchanged at its latest meeting suggests that it is still assessing the impact of Trump's tariffs on inflation. Powell indicated that a rate cut in September, which had been expected by some, is now less likely [3]. However, the dissents from Waller and Bowman highlight the potential for further conflict between the Fed and the White House.

Kugler's resignation and the subsequent appointment of a new governor could shape the Fed's approach to interest rates and economic policy. Investors and financial professionals should closely monitor these developments, as they could have significant implications for the U.S. economy.

References:
[1] https://www.washingtonpost.com/business/2025/08/01/kugler-resigns-fed-trump/
[2] https://apnews.com/article/trump-powell-interest-rates-federal-reserve-fed-88fe11c20c3074bbd1445a69bbdc623e
[3] https://www.wsaw.com/2025/07/30/federal-reserve-leaves-interest-rates-unchanged-even-trump-demands-cuts/