Fed Governor Adriana Kugler Resigns, Giving Trump an Opening to Reshape the Fed

Adriana Kugler, member of the Federal Reserve Board of Governors. (Yuki Iwamura/Bloomberg)

Federal Reserve Governor Adriana Kugler will step down August 8, handing President Donald Trump a strategic opportunity to reshape the central bank’s board as he escalates pressure on Fed Chair Jerome Powell for aggressive interest rate cuts.

Kugler, a labor economist appointed by President Joe Biden, announced her resignation Thursday without citing a specific reason. She will return to Georgetown University, where she previously taught. Her term was scheduled to end in January 2026.

Her departure opens a rare vacancy on the seven-member Fed Board of Governors at a pivotal moment. Kugler didn’t attend this week’s policy meeting, and her absence removes a labor-focused voice as the Fed grapples with its dual-mandate of controlling inflation while maintaining full employment.

Trump now has the chance to nominate a governor more aligned with his push for steep rate cuts. Two Trump-appointed governors, Christopher Waller and Vice Chair for Supervision Michelle Bowman, have already dissented from the rest of the Board and argued that it’s time to cut rates.

The Senate returns from August recess on September 2, ahead of the Fed’s meeting later that month. That timeline could allow Trump to nominate and confirm a successor in time for the new governor to participate in that critical policy decision.

Kugler’s departure comes amid some of Trump’s harshest criticisms yet of the Fed’s independence. On Friday, he accused the Fed of “playing games” with interest rates to interfere with elections. The president said that Powell should be “put out to pasture.”

While Kugler’s individual departure may not immediately alter the Fed’s trajectory, it could represent the first step toward a more politically aligned board. The shift comes as inflation shows signs of creeping higher and labor market conditions weaken.

“It has been an honor of a lifetime to serve on the Board of Governors of the Federal Reserve System,” Kugler said in her resignation statement. “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.”

The vacancy sets up what could be a contentious confirmation battle, with markets closely watching for signals about the Fed’s future direction under increasing political pressure.

Write to Nicole Goodkind at nicole.goodkind@barrons.com and Write to Anita Hamilton at anita.hamilton@barrons.com.