Trump demands Powell resign as Fed Governor Adriana Kugler steps down: ‘…was doing the wrong thing…’

Kugler, the first Hispanic policymaker to sit on the Fed’s Board of Governors, submitted her resignation letter on Friday, effective 8 August. Her early departure — her term was set to expire in January 2026 — coincided with renewed attacks by Trump on Fed Chair Jerome Powell, whom he derisively labelled “Too Late” in a Truth Social post.

Trump Reiterates Calls for Jerome Powell’s Resignation

Donald Trump wasted no time leveraging Adriana Kugler’s exit to advance his ongoing campaign against Jerome Powell. “Too Late Powell should resign, just like Adriana Kugler,” Trump wrote, falsely implying that Adriana Kugler resigned in protest against Powell’s stance on interest rates. “She knew he was doing the wrong thing. He should resign also!”

While Adriana Kugler’s resignation letter made no mention of Powell or disagreements over monetary policy, Donald Trump and his allies have increasingly accused the central bank of obstructing economic growth by maintaining elevated interest rates.

On Friday, the US president told reporters, “I’m very happy there’s now an opening. She clearly disagreed with ‘Too Late’ on rates.”

Adriana Kugler Maintained Support for Current Fed Policy

Contrary to Donald Trump’s claims, Adriana Kugler had not publicly opposed Jerome Powell’s monetary policy direction. In her most recent speech on 17 July, she advocated for holding interest rates steady “for some time,” citing a stable labour market and a recent uptick in goods inflation.

She was absent from the Fed’s policy meeting earlier this week, with officials attributing her nonattendance to a “personal matter.”

In her resignation letter addressed to US President Donald Trump, Kugler said: “It has been an honour of a lifetime to serve on the Board of Governors of the Federal Reserve System… I am especially honoured to have served during a critical time in achieving our dual mandate of bringing down prices and keeping a strong and resilient labour market.”

Market Reaction: Treasuries Rally, Traders Bet on Rate Cuts

Adriana Kugler’s departure, paired with soft US jobs data, triggered a rally in US Treasuries. Yields on two-year notes — the most sensitive to monetary policy — plunged by as much as 29 basis points, marking the steepest drop since December 2023, according to Bloomberg report.

The Bloomberg Dollar Spot Index also tumbled nearly 0.9%, as traders began fully pricing in two quarter-point rate cuts by the end of 2025. The first cut is now seen as having a 90% probability of occurring at the Fed’s next policy meeting.

Trump Eyes New Fed Leadership Ahead of Powell’s 2026 Exit

Adriana Kugler’s exit adds a layer of complexity to the central bank’s future leadership. Jerome Powell’s term as Fed Chair ends in May 2026, and Donald Trump could install a successor aligned with his views on monetary easing.

Treasury Secretary Scott Bessent has suggested the administration may first nominate someone to fill Kugler’s vacancy, then later elevate that appointee to chair.

Among those being considered are National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, current Governor Christopher Waller, and Bessent himself.

Adriana Kugler Returns to Academia

Adriana Kugler was appointed to the Fed in September 2023, fulfilling a long-standing Democratic priority to improve Hispanic representation within the central bank. Before joining the Fed, she served as the US executive director at the World Bank and held roles in the Obama administration, including Chief Economist at the US Department of Labor.

Adriana Kugler will return to her academic post as a professor at Georgetown University after 8 August.