Departure at the Federal Reserve Board: Trump capitalizes on opportunity
In a dynamic turn of events, former President Donald Trump is actively challenging the current Federal Reserve leadership on monetary policy, as a vacancy on the board opens up opportunities for potential influence.
As of August 2025, Jerome Powell remains the Fed Chair, with the Federal Open Market Committee (FOMC) keeping interest rates steady for now. However, the resignation of Adriana Kugler, a Fed Governor, earlier than her term expiry in January 2026, has created a vacancy that President Donald Trump, now a former president, could potentially influence through nomination and Senate confirmation.
Trump has publicly criticised Chair Powell’s decision to keep interest rates steady (between 4.25% and 4.5%) after the recent FOMC meeting and urged the Fed board to take control from Powell if he does not substantially lower rates. Trump's push for a more accommodative monetary policy is reflected in his strong desire for lower interest rates.
Two Trump-appointed governors, Michelle Bowman and Christopher Waller, have dissented against holding rates steady at the recent meeting, indicating some internal Fed board division on policy. This division is further emphasised by Trump's public criticism of Powell and his reference to the Fed Chair as a "stubborn IDIOT."
Regarding board membership and influence, the Fed Chair’s term is set to end next year, and while Powell may not continue as chair, he could remain on the FOMC until his overall term ends in 2028. The president — currently Joe Biden — is responsible for nominating Fed governors and chairmanship, with Senate confirmation required. However, the vacancy caused by Kugler’s resignation opens an opportunity for Trump—in a hypothetical future presidency or impact through political allies—to assert influence by nominating new governors when such vacancies arise.
The interest rate sets the rate at which banks can borrow from the central bank, and recent Fed reports suggest that the Fed may cut interest rates for the first time since December 2014 in September. This potential move comes as U.S. growth slowed in the first half of the year, while economic uncertainty persists.
Trump's new tax law is estimated to increase the deficit by around $3.3 trillion (approximately €2.8 trillion) over the next decade. Despite this, Trump continues to demand a significant cut in the interest rate.
It is important to note that Trump has threatened Powell's dismissal, but the legal hurdles for such a move are high. Trump's pressure could lead to more members aligning with his stance in the next decision, but actual control depends on presidential nomination and Senate approval.
In conclusion, the Fed board vacancy presents an opportunity for Trump to potentially influence the U.S. central bank, but the extent of this influence will depend on future political developments. The dynamic between Trump and the Fed Chair is a fascinating development in U.S. economic policy, and we will continue to monitor this situation closely.
In the context of ongoing political developments, former President Donald Trump's forthcoming influence on the Federal Reserve board, following the resignation of Adriana Kugler, could shape the U.S. central bank's policies, especially regarding monetary policy and interest rates. Additionally, Trump's push for lower interest rates, paired with his criticism of the current Fed leadership, underscores the potential impact of general-news events on the realm of finance and business, as well as the intricate connection between politics and economic policy.