The Federal Reserve announced on Friday that Adriana D. Kugler will step down from her position as a governor of the Federal Reserve Board next Friday. Her term was due to expire in January, but her early resignation gives President Trump an opportunity to more quickly appoint someone who could eventually replace Jerome H. Powell as chair.
Dr. Kugler missed the Fed’s most recent policy meeting this week and did not vote. In a speech earlier last month, she said the Fed should not cut interest rates “for some time” as tariffs trickled through to consumer prices.
The opening on the board comes as Mr. Trump pressures the Fed to cut interest rates and publicly berates Mr. Powell, saying he should lower borrowing costs or resign. The president has also toyed with firing Mr. Powell or naming a successor before Mr. Powell’s term as chair ends in May. On Friday, he went so far as to call on the board to remove Mr. Powell from his position as chair.
The Fed statement about Dr. Kugler’s early resignation did not give a reason for her decision. The central bank declined to comment beyond the announcement.
“It has been an honor of a lifetime to serve on the Board of Governors of the Federal Reserve System,” said Dr. Kugler said in a 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.”
Dr. Kugler has served as a governor at the Fed since September 2023 after being nominated by former President Joseph R. Biden Jr. She plans to return to her job as a public policy professor at Georgetown University in the fall.
Dr. Kugler is an economist with a background in labor economics who has Colombian heritage and was the U.S. executive director of the World Bank. She was the first Latino person to serve on the Fed’s board.
Mr. Powell said in a statement that Dr. Kugler “brought impressive experience and academic insights to her work on the board.”
The decision means that Mr. Trump will have the ability to reshape the top ranks of the central bank, both in terms of picking a new chair and filling Dr. Kugler’s seat. If Mr. Trump makes clear that whomever he chooses for Dr. Kugler’s seat is his pick for the chair, that could make for an awkward and potentially market-rattling situation in which the new governor is seen as something of a shadow chair, potentially undercutting Mr. Powell.
Mr. Trump, speaking to reporters on Friday afternoon, said he had just learned about the open position. “I just found out that I have an open spot on the Federal Reserve Board. I’m very happy about that,” he said.
Another wild card is whether Mr. Powell, once stepping down as chair, will leave the Fed altogether or stay on as a governor until that term expires in 2028. When asked on Wednesday at a news conference, he rebuffed the question, telling reporters: “I do not have any update for you.”
What he chooses to do will have broad ramifications for whomever Mr. Trump selects to fill Dr. Kugler’s seat on the seven-person board. If Mr. Powell remains a governor, whoever is appointed to Dr. Kugler’s vacancy will have to be a possible pick to become the next chair. If Mr. Powell chooses to depart, Mr. Trump will have yet another spot to fill.
In his first term, Mr. Trump selected Mr. Powell as chair and later had the opportunity to appoint two more governors to the powerful board, whose members vote on every policy decision. Those two officials, Christopher J. Waller and Michelle W. Bowman, dissented on the Fed’s decision this week to keep interest rates steady and instead called for a quarter-point reduction in interest rates at the July meeting. Mr. Trump noted their dissents on social media on Friday, describing them as “strong” and saying the push will only get “stronger.”
The more people Mr. Trump is able appoint to the board, the more sway he will have over the institution, which is set up to operate independently of the White House. The Fed is instead overseen by Congress, which must also vote on the president’s picks.
Mr. Trump has led a public campaign to discredit the Fed in recent months, culminating in his visit to the central bank’s headquarters to tour its $2.5 billion renovation last week. The president has said Mr. Powell mismanaged the project, which is $700 million over budget, and he appointed new leaders to the National Capital Planning Commission to review the cost of the renovation.
Bill Pulte, the Federal Housing Finance Agency director, who has been pushing for Mr. Powell to resign and even drafted a letter firing him as chair, posted the news of Dr. Kugler’s departure on X with a siren emoji.
Alan Rappeport is an economic policy reporter for The Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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