Trump Implies Departing Kugler Agreed With Him on Fed Policy. Her Speeches Suggest Otherwise.

Federal Reserve Gov. Adriana Kugler announced her surprise departure late last week. (Drew Angerer/Getty Images)

President Donald Trump suggested late Sunday that Federal Reserve Gov. Adriana Kugler, who announced her surprise resignation last week, may be leaving the central bank because she sided with him over Chair Jerome Powell over interest rate policy. Her statements, however, suggest she was no dove.

Speaking to reporters during a press briefing late Sunday, Trump said he had “a couple of people in mind” to replace Kugler. But he also hinted that she was in disagreement with Federal Reserve Chairman Jerome Powell over the direction of interest rates, which haven’t changed since December.

“I’ll be announcing someone for the filling of the person that left,” Trump said. “A woman left as you know who was I guess a Biden appointment, either Biden or Obama, but I think a Biden appointment, and she left early.”

“And I think she left because she agreed with me on interest rates, but they were on the other side of the ballpark,” Trump added. Powell has said the Fed is waiting to see whether tariffs raise inflation before cutting interest rates.

Kugler was appointed to the Federal Reserve’s Board of Governors in September of 2023, following her Senate confirmation that same month. She was nominated by President Joe Biden in May of that year.

Kugler’s recent speeches suggest she isn’t a “dove” in favor of cutting interest rates. The Fed governor gave a speech to a housing forum in Washington, D.C. last month in which she said it was “appropriate to hold our policy rate at the current level for some time.”

“This still-restrictive policy stance is important to keep longer-run inflation expectations anchored,” she added. “I see upward pressure on inflation from trade policies, and I expect additional price increases later in the year.”

She also warned in June that the president’s tariffs, and possible retaliatory increases from U.S. trading patterns, could “raise inflation over the rest of the year.

“I see greater upside risks to inflation at this juncture and potential downside risks to employment and output growth down the road,” she told the Economic Club of New York. “This leads me to continue to support maintaining the FOMC’s policy rate at its current setting if upside risks to inflation remain.”

Kugler didn’t attend last week’s Fed policy meeting, which concluded with rates holding at between 4.25% and 4.5%, due to what a central bank spokesman called a “personal matter.”

Two other Fed governors, Michelle Bowman and Christopher Waller, voted in favor of a quarter-point reduction. That marked the first time that two Fed governors dissented from the central bank’s consensus since 1993.

That has led, in part, to a massive swing in bets for a September reduction, which the CME Group’s FedWatch tool now pegs at around 85%, a 20 percentage point increase from a week ago.

Trump is almost certain to name a replacement who will support cuts beyond the September meeting.

Last week, in the wake of weaker-than-expected July jobs data that ultimately compelled him to fire the head of the Bureau of Labor Statistics, Trump urged the Fed’s Board of Governors to “assume control and do what everyone knows has to be done.”

He also repeated his longstanding call for Powell to resign.

“Kugler’s resignation brings forward the opportunity for President Donald Trump to nominate a (likely dovish) replacement for her—a position that could ultimately be used to replace Chair Jerome Powell when his term ends next May,” said ING’s global head of markets Chris Turner.

“An earlier replacement for Kugler would likely add another dissenter to the Fed’s current stance of unchanged rates and turn up the internal pressure on Powell,” he added.

Write to Martin Baccardax at martin.baccardax@barrons.com