Departure from Federal Reserve Board: Trump seized the opportunity
In the heart of August 2025, President Donald Trump finds himself at a critical juncture, poised to influence the future direction of the US Federal Reserve (Fed). The upcoming vacancy on the Fed board, with Adriana D. Kugler's departure effective from the 8th of August, presents an opportunity for Trump to shape the powerful central bank council [1][4].
Trump has been vocal in his criticism of the current Fed Chair, Jerome Powell, urging him to lower interest rates and accusing him of being a "stubborn IDIOT" for not making the right move regarding the interest rate [1]. As the search for a new Fed Chair, set to replace Powell in May 2026, intensifies, Trump's preferences could influence the selection process [1][4].
Among the potential candidates is Christopher Waller, one of the representatives who advocated for a reduction in the interest rate at the latest decision. Waller, who is said to have political ties to Trump, is being considered a possible successor to Powell [1].
The Fed's traditionally independent posture and the preservation of long-term independence are intended to ensure smooth policy continuity despite changes in administration [2]. However, Trump's calls for aggressive rate cuts and the resignation of Kugler present an opportunity for him to indirectly exert influence on the central bank council through the selection of loyal followers.
The Fed is pursuing a cautious monetary policy due to existing inflation risks, and has so far hesitated to cut rates [5]. This cautious approach contrasts with Trump's demand for a significant reduction in the interest rate to lower borrowing costs and stimulate consumption and investment [6].
The US economy has shown signs of slowing in the first half of the year, increasing the possibility of a Fed interest rate cut in September [7]. The low interest rates make it easier for governments to borrow, and Trump's new tax law is estimated to increase the deficit by approximately $3.3 trillion (around €2.8 trillion) over the next decade [8].
The uncertainty about economic prospects remains high in the US. Dissenting voices in the central bank council are rare, but Trump's pressure may cause further members to align with his stance at the next decision [3]. The appointment of a new Chair and Board members aligned with Trump’s goals could tilt monetary policy toward more accommodative stances, potentially boosting growth but also raising concerns about inflation and Fed credibility.
In summary, Trump is actively seeking new Fed leadership aligned with his economic priorities, with the pending appointment to replace Kugler on the Board that may precede naming the next Chair. This process is highly consequential for future interest rate policy and economic growth trajectories [1][4].
The ongoing search for a new Fed Chair and the vacancy on the Fed board, following Adriana D. Kugler's departure, is a critical opportunity for President Donald Trump to shape the Federal Reserve council with candidates who align with his economic priorities [1][4]. Trump's preferences could indirectly influence the central bank's monetary policy, as the appointment of loyal followers could tilt policy toward more accommodative stances, potentially impacting growth, inflation, and Fed credibility [1][4].
