According to Cointelegraph, Federal Reserve Board of Governors member Adriana D. Kugler has announced her resignation, a move that comes at a critical juncture for the U.S. central bank. U.S. President Donald Trump continues to challenge the long-standing tradition of Federal Reserve independence, adding to the significance of Kugler's departure. The Federal Reserve stated that Kugler's resignation will take effect on August 8, although she did not specify a reason for her decision. It was noted that she plans to return to her academic position at Georgetown University, with her term originally set to conclude in January. Kugler expressed her gratitude for the opportunity to serve on the Board of Governors, highlighting the importance of her role during a pivotal time for the Federal Reserve's dual mandate of price stability and a robust labor market.
Kugler's exit is particularly noteworthy due to her position as a voting member of the Federal Open Market Committee (FOMC), the 12-member panel responsible for setting U.S. interest rates. Her resignation follows the FOMC's recent decision to maintain interest rates, avoiding a clear indication of when rate cuts might resume. With her departure, President Trump has the opportunity to nominate a replacement, as the seven members of the Federal Reserve Board of Governors are appointed by the president and confirmed by the Senate.
The resignation occurs amidst heightened tensions for the Federal Reserve, as questions arise regarding Fed Chair Jerome Powell's future and President Trump intensifies his criticism of the institution's independence. Trump and his allies have been urging Congress to remove Powell, accusing him of poor monetary policy management and increasing federal borrowing costs. In June, Trump publicly criticized Powell for not lowering the Fed rate, even suggesting he might appoint himself to the Fed. Trump's recent comments on Truth Social further criticized Powell for the Fed's decision to keep rates steady at its latest policy meeting.
Trump's public interventions represent a departure from the long-standing norm of central bank independence, where the executive branch traditionally refrains from influencing monetary policy decisions. He has advocated for significant rate cuts to reduce federal interest payments and boost economic growth. The Fed's policy decisions continue to impact financial markets, with Bitcoin experiencing fluctuations following a recent inflation report and the Fed's decision to hold rates steady. However, as Cointelegraph noted, expectations for rate cuts have increased after July's weaker-than-expected nonfarm payrolls report.
