Federal Reserve Governor Kugler steps down, giving 'very happy' Trump a slot to fill

LeMonde

17 hours ago

The Federal Reserve announced Friday, August 1, that Governor Adriana Kugler will step down next week, opening up a spot on the central bank's powerful board that President Donald Trump will be able to fill. Kugler, who did not participate in the Fed's policy meeting earlier this week, would have completed her term in January. Instead, she will retire August 8. She did not provide a reason for stepping down in her resignation letter.
Trump said he was "very happy" about the upcoming vacancy, after Kugler submitted her letter of resignation to him. He has continued his attacks on the Fed since chair Jerome Powell said Wednesday that the central bank would keep its short-term interest rate unchanged. Powell also said the Fed could take months to evaluate the impact of tariffs on the economy before deciding to cut rates, as Trump has demanded.
Powell is "a stubborn MORON, must substantially lower interest rates, NOW," Trump posted early Friday morning, before the monthly jobs report was released. That report showed hiring slowed in July and was much lower in May and June than had been initially reported.
Kugler was appointed to the Fed's seven-member board of governors by former President Joe Biden in September 2023. She was the first Hispanic Fed governor, and prior to joining the Fed, was a professor at Georgetown University and was the US representative to the World Bank. She will return to the Georgetown faculty in the fall.
"I am proud to have tackled this role with integrity, a strong commitment to serving the public, and with a data-driven approach strongly based on my expertise in labor markets and inflation," she said in her resignation letter.
The rate debate
In her last speech as a Fed governor two weeks ago, Kugler expressed support for Powell's view that the central bank should keep rates unchanged while officials monitor the economy to see how Trump's tariffs affect inflation and the economy.
Trump, meanwhile, has said he will appoint Fed officials who favor cutting rates. One complication is that Powell's term as chair ends in May 2026. But his position on the Fed's governing board lasts through January 2028. As a result, he could stay on the board even after stepping down as chair, and simply remain as one of seven governors. There is some precedent for such a step: Marriner Eccles, who served as Fed chair in the 1930s, remained on the board after completing his term as chair.
If Powell took such a step, that would mean whomever the Trump administration chose to replace Kugler could then be elevated to chair after Powell finishes as chair in May 2026. In other words, to get their choice of Fed Chair in 2026, the Trump White House may choose to appoint that person to replace Kugler as governor, and then elevate them to Fed chair in May 2026.
Powell has declined to answer at the last two press conferences whether he will leave the board when he is done as chair.