Fed Governor Kugler to Resign, Opening Spot for a Trump Pick
'It has been an honor of a lifetime to serve on the Board of Governors of the Federal Reserve System,' Kugler said in a resignation letter to Trump. 'I am especially honored to have served during a critical time in achieving our dual mandate of bringing down prices and keeping a strong and resilient labor market.'
Kugler's governor term was not set to expire until January 2026.
Trump and his allies have applied intense pressure on the Fed and Chair Jerome Powell to lower interest rates, which policymakers have declined to do so far this year.
Trump, departing the White House on Friday, told reporters that he is 'very happy' that he has an open spot on the Fed board and that he believes Kugler is stepping down because 'she disagreed with 'Too Late' on the interest rate,' using his derogatory nickname for Powell.
Kugler's resignation letter did not specify why she was vacating her role. She has not publicly strayed from Powell on interest rate policy. In her most recent policy speech, on July 17, Kugler said that with goods inflation rising and the labor market stable the Fed should continue holding rates steady 'for some time.'
Kugler was not present for the Fed's policy meeting earlier this week. The Fed said at the time that she missed the meeting for a 'personal matter.'
Treasuries, which were rallying since Friday morning on softer jobs data, extended their gains after Kugler announced her resignation. The rally sent yields on two-year notes — which are most sensitive to changes in monetary policy — tumbling as much as 29 basis points, the most since December 2023.
Traders were quick to add to bets on rate cuts. They are now fully pricing in two, quarter-point reductions this year, with a 90% chance of the first one coming at the Fed's meeting next month. The Bloomberg Dollar Spot Index closed nearly 0.9% lower.
Trump earlier on Friday called on members of the Fed's board to 'ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!,' in an apparent call for them to vote for lower interest rates.
The increased pressure from Trump comes after Fed officials left interest rates unchanged on Wednesday. In his post-meeting press conference, Powell didn't offer any clear sign that policymakers were likely to cut at their next meeting, in September.
Earlier: Trump Says Powell Should Be Put 'Out to Pasture' in New Attack
Fed Chair Choice
Her decision to step down also comes as Trump and top administration officials ramp up their search for whom will replace Powell when his term leading the central bank ends in May 2026. Treasury Secretary Scott Bessent had suggested the administration might nominate someone to first fill Kugler's seat and then later move to elevate that person to chair.
National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller and Bessent have all been floated as contenders to lead the central bank.
Kugler, who has served as a Fed governor since September 2023, became the first Hispanic policymaker to serve on the central bank's Board of Governors. Her appointment fulfilled a years-long call from Democrats to improve diversity at the Fed by naming a Hispanic member.
Prior to joining the Fed, the Colombian-American economist was the US representative to the World Bank. She also served a stint as the chief economist at the Labor Department during President Barack Obama's administration.
Her resignation will be effective Aug. 8, the Fed said. She will return to her position as a professor at Georgetown University.
With assistance from Jonnelle Marte, Ezra Fieser and Skylar Woodhouse.
©2025 Bloomberg L.P.
This article was generated from an automated news agency feed without modifications to text.
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