President Donald Trump has unexpectedly been handed an opportunity to install a new member at the Federal Reserve Board earlier than planned, following the resignation announcement of Fed Governor Adriana Kugler on Friday.
It may also fast-track his timetable for choosing the next Fed Chair, an appointment he had likely pencilled in for May but might now be forced to make much sooner.
Trump has been publicly hounding the Fed, demanding it do this or that, insisting he wants his people in there. Now he’s got his chance.
Kugler’s exit comes at a time when the White House is dialling up the pressure on the Fed in a way not seen since Nixon, with Trump regularly hurling personal insults at current Fed Chair Jerome Powell on social media. On Thursday, Trump labelled Powell “too angry, too stupid, and too political” for refusing alongside most of the rate-setting committee to lower interest rates again.
Of course, one more loyalist doesn’t guarantee policy changes overnight. This week, the Federal Open Market Committee (FOMC) voted 9–2 to hold steady. The two dissenters? Trump appointees from his first term, casting the first such votes of disunity since 1993.
But beyond the symbolism of dissent, Kugler’s resignation may accelerate Trump’s roadmap to a Fed takeover. If he wants an outsider, like National Economic Council director Kevin Hassett or former Fed governor Kevin Warsh, he might not get another opening for years.
Powell’s chairmanship expires in May, but his term as a governor runs until 2028. While it’s customary for outgoing chairs to leave entirely, Powell has so far refused to indicate whether he’ll go quietly. Should he stay on the Board, Trump won’t get another seat to fill before 2028.
Which means this current vacancy might be the only shot Trump has to install a new favourite and set up a May coronation. If he wants to slot someone in now and promote them in spring, he needs to move fast.
Whenever he makes a decision, it’ll still need Senate confirmation, a process that rarely moves swiftly, even under a friendly majority.
Even with a Republican Senate, it takes time to grind someone through the confirmation sausage factory.
Even if Trump installs a new Chair tomorrow, the Fed’s policy is determined by majority vote within the FOMC. Chairs traditionally receive some deference when forging consensus, but only if they can make a compelling economic case. Intimidation by tweet doesn’t usually cut it.
Leaving the White House on Friday, Trump was positively glowing. He told reporters he was “very pleased” to have a new Fed vacancy. He also claimed Kugler had resigned because she “didn’t agree with the ‘Too Late’ nickname” he had assigned to Powell.
For the record, this has nothing to do with Kugler’s actual stance. In a speech on 17 July, she explicitly said that with inflation rising and the labour market stable, the Fed should keep rates steady “for some time.”
But never let the facts get in the way of a good power grab.