Is Trump About to "Take Action" Against the Fed?

On August 1 (U.S. Eastern Time), the Federal Reserve announced that Governor Adriana Kugler would resign from her position on the Board of Governors, effective August 8. She has submitted her resignation to U.S. President Donald Trump.

Shortly afterward, Trump stated, "A vacancy on the Federal Reserve Board excites me tremendously." Analysts suggest that Kugler’s resignation paves the way for Trump to nominate his own candidate to the Fed Board earlier, allowing him to exert greater influence over interest rate policy in the coming months.

Meanwhile, Trump abruptly took action against the Bureau of Labor Statistics (BLS). Just hours after the July nonfarm payroll report was released, Trump ordered the immediate dismissal of BLS Commissioner Erica McEntaffer. Additionally, due to the weaker-than-expected July jobs data, the U.S. stock market plunged on Friday, wiping out over $1 trillion in market value.

On August 1, the Fed announced that Governor Adriana Kugler would step down from the Board, effective August 8.

In her resignation letter to Trump, the 55-year-old Kugler did not specify her reasons but mentioned she would return to Georgetown University as a professor in the fall. She was absent from this week’s FOMC meeting, with officials citing personal reasons.

In a Fed statement, Kugler said: "Serving on the Federal Reserve Board has been the honor of a lifetime, especially during this critical period as we work to fulfill our dual mandate of price stability and a strong, resilient labor market."

The Fed Board has seven seats, all of which are permanent voting members of the FOMC (Federal Open Market Committee). Another five FOMC seats rotate among regional Fed bank presidents. All governors are nominated by the president and confirmed by the Senate for 14-year terms, while regional Fed presidents are selected by their respective district banks.

Kugler’s term was originally set to expire in January 2026. A former chief economist at the U.S. Labor Department, she was nominated by Biden and joined the Fed Board in September 2023, succeeding Lael Brainard, who became Biden’s economic advisor. As a governor, Kugler was a permanent FOMC voting member, influencing interest rate decisions. Recently, she held a relatively hawkish stance, advocating for holding rates steady until the inflationary impact of Trump’s tariffs becomes clearer.

Fed Chair Jerome Powell wished Kugler well, stating: "She brought exceptional experience and academic insight to the Board’s work."

After Kugler’s resignation, Trump remarked, "I understand Governor Kugler 'disagrees with Chair Powell.' A vacancy on the Federal Reserve Board excites me tremendously."

U.S. media reports suggest that Trump administration officials recently proposed installing a 'shadow chair' on the Board before Powell’s term ends in May next year, preparing for a leadership transition. Kugler’s departure makes this strategy possible five months earlier.

Additionally, the White House hopes Powell will also resign from the Board, giving Trump another appointment opportunity. However, Powell has not indicated whether he plans to step down before 2026, and his Board term runs until 2028.

Earlier this week, two Trump-appointed Fed governors—Christopher Waller and Michelle Bowman—voted against the decision to pause rate cuts, instead calling for a 25-basis-point reduction. This marks the first time since 1993 that Fed governors have openly dissented on a rate decision.

On August 1, both Waller and Bowman expressed concerns about the labor market outlook, arguing for earlier monetary easing.

About 30 minutes after their statements, the July jobs report showed weaker-than-expected hiring. Following the report, market expectations for a September rate cut surged from below 40% to 80%.

Trump later took to social media again, praising the "strong dissent" against holding rates steady and declaring that "the opposition on the Fed Board is strong—and will get stronger."