Trump Calls for Powell's Resignation After Fed Governor Exit
Trump Intensifies Pressure on Powell After Kugler's Departure
The resignation of Fed Governor Adriana Kugler has provided Donald Trump with an opportunity to influence the Federal Reserve’s policy direction. Kugler's resignation is set for August 8, moving up from her term's original end date in January 2026.
Trump quickly seized on the resignation to increase pressure on Fed Chair Jerome Powell. In a post on X, he stated, “'Too Late' Powell should resign, just like Adriana Kugler, a Biden Appointee, resigned. She knew he was doing the wrong thing on Interest Rates. He should resign, also!”
This follows Trump's previous calls for Powell to cut interest rates. However, the Fed has maintained interest rates. Kugler’s resignation letter didn’t mention any disagreements with Powell or indicate whether he would resign.
In her last public statements, Kugler supported holding interest rates steady, aligning with Powell’s stance. The Bloomberg Dollar Spot Index decreased by 0.9% as traders factored in two rate cuts by the end of the year. Should Powell resign, Trump could nominate a replacement favoring lower rates.
White House reporter Aamer Madhani suggested potential replacements like Kevin Hassett and Kevin Warsh. Kugler’s departure allows Trump to exert early influence on Fed leadership prior to Powell’s term ending in May 2026.
Market Unlikely to See Powell's Exit
Despite the presence of Trump-appointed Fed governors, the likelihood of Powell's dismissal remains low. Prediction markets indicate minimal confidence in Jerome Powell resigning or being removed as Fed Chair in 2025.
Polymarket data shows only a 14% chance of Powell leaving his position by year-end. Market participants seem to believe Powell will remain, despite political pressures. There are no indications of Powell’s intention to resign, nor any push from the Fed’s board for his removal.
Powell's term extends through May 2026, and no formal process for his removal has been initiated. Market traders anticipate a 25-basis point cut at the Federal Reserve’s September 17 meeting.
Polymarket data indicates a 71% probability of a 25-basis point cut, a 22% chance of no change, and an 8.3% chance of a 50-basis point cut. The odds of a rate hike are below 1%.