The Federal Reserve announced on Friday (August 1st) that Federal Reserve Governor Adriana Kugler will resign from her position on the board on August 8th. This means President Trump needs to expedite the filling of the vacant position on the Federal Reserve board.
Kugler’s term as a governor was originally set to expire in January 2026. The Trump administration previously indicated that they might announce a replacement for Federal Reserve Chair Jerome Powell in October or November 2025, and then consider the selection of board members in January 2026.
In a statement, Kugler expressed, “Serving as a Federal Reserve board member has been the honor of a lifetime for me. I am especially privileged to serve at this critical moment and achieve our dual mandate of price stability and a strong, flexible labor market.”
At the time of her resignation, President Trump and his allies had imposed significant pressure on the Federal Reserve to lower interest rates. The Federal Reserve has maintained interest rates at 4.25% to 4.50% for the fifth consecutive meeting as expected.
Trump and senior government officials are actively searching for a replacement for Federal Reserve Chair Powell. Powell’s chairmanship is set to end in May 2026, but his term as a governor can continue until January 2028.
This implies that even after stepping down as Federal Reserve Chair next May, Powell may still remain on the Federal Reserve board to participate in monetary policy decisions. Powell refused to comment on whether he would continue as a Federal Reserve governor.
Potential candidates for Federal Reserve Chair include former Federal Reserve Governor Kevin Warsh, current Chairman of the National Economic Council Kevin Hassett, and Treasury Secretary Scott Bessent. Additionally, investors are paying attention to current Federal Reserve Governor Christopher Waller, who had a more open stance towards rate cuts earlier this month during Trump’s first term.
Bessent suggested that the government may nominate a suitable candidate to fill Kugler’s spot on the board first before appointing a Federal Reserve Chair.
Kugler has been a Federal Reserve governor since September 2023. The Federal Reserve stated that her resignation will take effect on August 8th. She will return to her position as a professor at Georgetown University.
Kugler was absent from Wednesday’s important Federal Reserve board meeting. According to the meeting results announced on Wednesday, the 11 attending governors voted 9-2 to keep the interest rates unchanged. The federal funds rate will remain in the range of 4.25% to 4.5%.
Federal Reserve Governor Michelle Bowman and Christopher Waller advocated for loosening monetary policy, believing that inflation is under control and the labor market may soon begin to weaken.
Their two dissenting votes mark the first time a Federal Reserve board member has voted against an interest rate decision since late 1993.