Speedy departure of the Fed could accelerate Trump's selection for the following chairman
Trump Given Early Opportunity to Shape Federal Reserve with Adriana Kugler's Resignation
In a surprising turn of events, US Federal Reserve Governor Adriana Kugler has announced her resignation, giving President Donald Trump an opportunity to fill a vacancy at the Fed earlier than expected. If Powell does not depart from the board next year, Trump would not get another opportunity to fill a vacancy before 2028.
The resignation might force Trump to pick the next Fed chair months sooner than he had anticipated. The leading potential candidates for the next Federal Reserve chair, given Kugler's resignation, are Kevin Hassett, Kevin Warsh, and Christopher Waller.
Kevin Hassett, currently the director of the National Economic Council, has gained significant support in prediction markets to succeed Powell. The odds of Hassett being chosen have recently risen to 48%. Kevin Warsh served on the Federal Reserve Board of Governors from 2006 to 2011 and is considered highly qualified. Trump stated he regrets not appointing him earlier. Warsh is seen as bullish on the economy and has criticized current Fed policies, aligning with Trump's desire for more rate cuts.
Christopher Waller also appears to be on Trump’s short list, though less prominently discussed compared to the two Kevins.
Trump has indicated he prefers a Fed chair more willing to cut interest rates, implying the next chair may shift the Fed’s monetary policy stance more dovishly than Powell's current approach. His decision on the appointment is expected soon.
Last week was the first instance since 1993 that two governors voted against an FOMC decision, with two dissenting votes in favor of lowering interest rates coming from officials appointed by Trump during his first term. If Trump wants to pick an outsider to join the board, he might not get another chance soon.
The nominee for the vacant position would require confirmation by the US Senate, a process that can take several months. Tobin Marcus, head of US policy and politics at Wolfe Research, stated that this is the one vacancy Trump has to work with. LH Meyer/Monetary Policy Analytics Inc economist Derek Tang stated that the "ball is now in Trump’s court."
Powell's term as chair of the US Federal Reserve ends in May next year, but his underlying post as a governor extends into 2028. There has been no indication that Powell has made a decision on his departure from the Fed board. Trump has publicly criticized Fed Chair Jerome Powell over monetary policy and has been putting pressure on the Fed to make certain decisions, including lowering interest rates.
As the political landscape shifts, the future of the Federal Reserve and its monetary policy remains uncertain. The upcoming appointment is expected to have significant implications for the US economy and global financial markets.
- The resignation of Adriana Kugler from the US Federal Reserve has created a new opportunity for President Donald Trump to shape not only the federal reserve's policy-and-legislation but also to steer the course of war-and-conflicts that may arise from global economic policies, given the general-news about his previous criticisms of Fed Chair Jerome Powell.
- As the political landscape continues to shift due to the upcoming appointments at the US Federal Reserve, the issue of migration, a topic heavily influenced by economic conditions, could also be impacted by the choices Trump makes in selecting the next Fed chair, especially if he leans towards a more dovish monetary policy, as reported.
