WASHINGTON: Federal Reserve Governor Adriana Kugler will step down from her post on Aug 8, the US central bank said Friday (Aug 1), creating a vacancy that could allow President Donald Trump to begin reshaping the Fed’s leadership amid tensions over interest rate policy.
Kugler, who joined the Fed in September 2023, was originally set to serve until January 2026. The central bank said she will return to Georgetown University as a professor next autumn.
Kugler did not attend this week’s Federal Open Market Committee (FOMC) meeting, a move Fed watchers described as unusual. The central bank did not provide further comment on her early exit.
Her resignation comes as Fed Chair Jerome Powell’s term nears its May 2026 end. Trump, who has long criticized Powell and the Fed for maintaining high interest rates, has threatened to remove Powell and could use Kugler’s vacancy to elevate a preferred candidate.
Trump will now nominate a new governor to serve the remainder of Kugler’s term. The White House did not immediately respond to a request for comment on who might be chosen.
In a resignation letter to Trump, Kugler said: “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.”
Kugler’s tenure was marked by the Fed’s efforts to bring inflation under control through aggressive rate hikes. While inflation has recently moved closer to the Fed’s 2% target, the central bank’s high rates have become a source of political friction.
At its latest meeting this week, the Fed left interest rates unchanged at 4.25% to 4.5%, opting to observe the economic effects of Trump’s sweeping tariff increases before adjusting policy. Two FOMC members dissented, urging an immediate rate cut due to rising risks to the labor market and the belief that tariff-driven inflation would be temporary.
