A vacancy on the Fed opens early while Trump urges the board of directors to “assume control” if Powell does not reduce the rates

In an article on Truth Social before Kugler’s announcement, President Trump took a blow to Powell, saying that he had “substantially” the lower interest rates, after the Federal Open Market Committee voted massively to maintain unchanged prices.

“If he continues to refuse, the board of directors should assume control and do what everyone knows how to do,” added Trump in the post.

Kugler said that she would resign her post on August 8, earlier than her departure scheduled for January when her mandate to the Council of Governors Expire. She plans to return to Georgetown University as a teacher this fall, according to a press release.

Kugler’s departure gives Trump the opportunity to appoint a voting member to the FOMC and extend his influence. The FOMC establishes the rate of federal funds which, according to Trump, must lower. The committee is made up of the seven governors who sit on the Fed board of directors, the president of the New York Fed and four presidents of the regional bank of the Federal Reserve.

The FOMC meeting this week which maintained prices unchanged between 4.25% and 4.5% saw the dissent of two Fed governors, named the Trump Michelle Bowman and Christopher Waller.

He marked a rare break in what is a typically unanimous vote, but it was far from being a mutiny, said Michael Ashley Schulman, the director of investments at Running Point Capital Advisors.

Since interest rate decisions are decided by a simple majority vote by the 12 members of the FOMC vote, it is possible that Powell, which has only one vote and no veto, could be replaced. But it is unlikely, said Schulman.

“A handful of dissidents show that the committee can growl, but a successful revolt would need at least seven` `non ” against Powell, a version inside the turning of the turning the Succession floor on Logan Roy, “he said Fortune, Referring to the television show on a business power struggle. “The chances remain low unless the data relaunches hard or new named the balance.”

Trump’s attacks on Fed and Powell increased in his second term. And its constant insistence on lower rates and previous threats to name the successor of Powell, put pressure on the Fed to exercise independence.

However, Powell always has ways to combat Trump’s influence, if he chooses it, said Mark Spindel, principal advisor at F / M Investments and co-author of The myth of independence: how the congress governs the federal reserve.

Powell clearly indicated that he would serve the rest of his mandate as president of the Fed until he expires in May, but Spindel notes that Powell can also remain on the Council of Governors afterwards because his mandate on the board of directors, which ends in 2028, is independent of his four -year mandate as president.

“Powell Staying a certain time after his presidency would be a scenario by which he could prevent the president from reaching a majority of the Council of Governors, preventing all kinds of strange dynamics and making communication by the incoming chair more difficult,” said Spindel Fortune.

Powell has repeatedly refused to say if he intends to stay as the Fed governor after the end of his mandate.

It is also not known how Trump will react if the Fed reduces the rates. The economy was largely resilient despite the uncertainty caused in part by the threat of prices on the main American trade partners, but the cracks began to emerge. The American economy only added 73,000 jobs last month and the gains in June and May were strongly revised, according to the Bureau of Labor Statistics.

The new figures were so amazing that they upset the previous story that the labor market was remarkably proof of shock, which colored the Fed position on the rates.

During the press conference following the Fed’s decision to maintain the unchanged prices, Powell hesitated to guide towards a rate in the coming months. He took a fellowship tone, according to a note from the macroeconomic team of Bank of America, putting an obstacle to the investor hopes that the next FOMC meeting in September could lead to a drop in rate.

“It seems to me – and almost the whole committee – that the economy does not work as if the restrictive policy retains it inappropriately,” said Powell.