Former President Donald Trump is urging Federal Reserve Chairman Jerome Powell to step down following the earlier-than-expected departure of Fed Governor Adriana Kugler. This move is intensifying political pressure on the central bank, although financial markets largely anticipate Powell will remain in his position.
Trump Calls for Powell’s Resignation as Fed Seat Opens Sooner Than Expected
Adriana Kugler’s resignation from the Federal Reserve Board of Governors, effective August 8, presents Donald Trump with an opportunity to potentially influence the direction of monetary policy. Kugler’s term was originally set to conclude in January 2026.
Trump swiftly capitalized on Kugler’s exit to increase the pressure on Fed Chairman Jerome Powell. In a statement on social media, Trump suggested Powell should follow Kugler’s lead and resign, implying disagreements over interest rate policy. He stated that Kugler, a Biden appointee, resigned because she knew Powell was mishandling interest rates.
Leading up to the most recent Federal Open Market Committee (FOMC) meeting, Trump had publicly advocated for interest rate reductions. However, the Fed chose to maintain interest rates at their current levels. Notably, Kugler’s resignation letter did not mention any disagreements with Powell or the Fed’s policies.
In her final public statements, Kugler had expressed support for keeping interest rates steady, aligning with Powell’s approach. Market analysts closely monitored these developments. The Bloomberg Dollar Spot Index experienced a decline of 0.9% as traders began to factor in the possibility of two interest rate cuts before the end of the year. Should Powell resign, Trump would have the power to nominate a replacement who favors lower interest rates.
According to White House correspondent Aamer Madhani, potential candidates for the Fed position include Kevin Hassett and Kevin Warsh. Kugler’s departure allows Trump to exert influence over the Fed’s leadership structure sooner than expected, ahead of Powell’s term expiration in May 2026.
Market Sentiment Suggests Powell Will Likely Remain; September Rate Cut Expectations Rise
Despite the presence of several Fed governors favored by Trump, the likelihood of Powell’s removal from office appears to be diminishing. Prediction markets indicate a low probability of Jerome Powell resigning or being removed as Fed Chair during 2025.
Data from Polymarket suggests only a 14% chance of Powell leaving his position before year’s end. Market participants seemingly believe Powell will weather the current political pressures. There is also no indication that Powell intends to resign or that the Fed’s board is seeking his removal.
Powell’s current term extends until May 2026, and no formal process to remove him has been initiated. However, market expectations are shifting toward a potential interest rate cut of 25 basis points by the Federal Reserve at their September 17 meeting.
Additional Polymarket data indicates a 71% probability of a 25-basis point rate cut in September. The likelihood of no change in rates is estimated at 22%, while a more substantial cut of 50 basis points has an 8.3% chance. The odds of a rate increase are less than 1%.
Paul
Paul Adedoyin is a crypto journalist with 4+ years experience who provides timely news, in-depth research, and insightful content to inform and empower his audience. His works have been featured on sites such as CryptoMode, CryptoNewsFlash among others.
He holds a degree in Geophysics from OAU, Nigeria. When he’s not writing, he loves watching soccer and reading educative journals.
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