Kugler Resigns from Fed Board Amid Trump’s Growing Pressure

The Federal Reserve Board is confronting fresh turmoil as Adriana D. Kugler resigns during a critical period of political tension. Her departure comes as President Donald Trump steps up efforts to influence the central bank’s operations.

Kugler’s early exit fuels fears over Fed’s stability

As Jerome Powell continues to face questions over his leadership and interest rate choices , Kugler’s resignation puts into question the future course and independence of the institution. She will officially step down from her role as a voting member of the Federal Open Market Committee (FOMC) on August 8.

She intends to resume her studies at Georgetown University, shortening a term that was to end in January. Although her formal announcement highlighted her pride in her work as a public servant, analysts believe that the time of her departure carries a political significance.

Trump Eyes Greater Influence Over Fed

Kugler’s exit now opens the door for Trump to appoint a new governor to the seven-member Fed Board. This shift may be enough to swing the monetary policy in the direction of making more drastic rate cuts. Trump has continually attacked the Fed policy, arguing that it should strategically reduce rates to make borrowing more affordable and the economy prosperous.

In June, he expressed frustration over Powell’s resistance to rate cuts, hinting at even nominating himself to the Fed. Although that idea remains far-fetched, it illustrates Trump’s escalating desire to sway decisions at the central bank. His recent Truth Social posts also slammed the Fed’s decision to hold rates steady at its July meeting.

Fed Independence in the Crosshairs

The tradition of central bank independence has long been a cornerstone of US economic policy. However, that norm is increasingly under threat. 

The hostile tone of Trump and open interventions indicate a desire to erase this division. As a result, numerous economists are concerned with long-term effects on the credibility of the Fed and market stability.

Besides the political pressure, the Fed is still struggling with undesired inflation. Data released earlier this week indicated surprising price increases . As markets expected rate cuts, the Fed took a cautious approach, resulting in a capital outflow that sent asset prices tumbling, including Bitcoin.