Federal Reserve Governor Kugler Resigns amid Sharp Split over Interest Rates

Federal Reserve Governor Adriana Kugler announced her resignation on Friday, creating a key vacancy just as President Donald Trump intensifies his push for steep interest rate cuts, in a rare and highly publicized rift within the U.S. central bank.

In a letter addressed to President Trump, Kugler did not specify her reasons for stepping down, noting only that she would return to Georgetown University as a professor this fall.

“It has been a tremendous honor to serve on the Board of Governors of the Federal Reserve,” Kugler wrote. “I am especially proud to have served during a critical time in fulfilling our dual mandate of bringing down inflation while maintaining a strong and resilient labor market.”

Kugler’s term was originally set to expire in January 2026. Her departure paves the way for Trump to nominate his own candidate to the seven-member Board of Governors. According to CNBC, two of Trump’s previous appointees, Christopher Waller and Michelle Bowman,  voted against the Fed’s decision on Wednesday to keep its benchmark interest rate unchanged, signaling instead their preference for an immediate rate cut.

The Federal Reserve held rates steady in its latest policy meeting, but remarks from Chair Jerome Powell afterward dampened expectations that borrowing costs would begin to fall in September. This triggered frustration from Trump, who has called for swift and deep rate reductions to stimulate the economy.

The policy decision passed by a narrow 9–2 vote, an unusually divided outcome for a consensus-driven institution. It marked the first time in more than three decades that two Fed governors dissented from the majority on a key interest rate decision.

The President nominates all members of the Fed’s Board of Governors, subject to confirmation by the U.S. Senate. Kugler’s resignation now gives Trump a critical opportunity to further reshape the central bank at a pivotal moment for U.S. monetary policy.