Bloomberg reports that Trump’s advisors are “encouraging” him to nominate a temporary Fed governor to fill Ariana Kugler’s soon-to-be vacant seat on the central bank’s board. Naming a governor to serve out the term for the seat opening soon, set to expire in January 2026, would give Trump additional time to interview candidates to serve as chair when Powell’s tenure leading the central bank ends in May of next year. Fed Governor Adriana Kugler announced last week that she plans to vacate her role on Aug. 8.
The Fed pick is likely to already work in government, be a short term choice and have been previously vetted by the US Senate for a Federal job. This person would still needs to clear the Senate confirmation process, a vetting process that has traditionally taken months, but could be expedited if Trump pressures lawmakers to quickly fill the seat.
In this case, neither Kevin Warsh or Kevin Hassett will fill the job. Warsh is not working for the government now and Hassett’s current position as the the Director of the National Economic Council does not require Senate confirmation.
Trump is slated to meet with advisers on Wednesday about the Fed pick, Bloomberg reported.
Trump on Tuesday said he would make his decision for a replacement for Kugler this week as he looks to make his imprint on the central bank. No decision should be deemed final until announced by Trump, a White House official said.
Trump also said that he’s weighing whether to fill the seat with a short-term pick or someone he would likely elevate to Fed chair next year: “We’ll either decide on one for permanence or the four-month period — the term. You know, there’s a term of about a number of months,” Trump told reporters at a White House event on Tuesday.
Kugler’s early departure hands Trump a sooner-than-anticipated opportunity to fill the Fed board with a governor who more closely aligns with his preference for lower interest rates.
Among the broader group of 19 policymakers who participate in FOMC meetings, a majority signaled in June that they expect two rate cuts this year, a projection that makes a move in September a strong possibility.
As a reminder, two Fed governors Christopher Waller and Michelle Bowman, both Trump appointees, voted against the July decision to hold rates steady, the first time two members of the board had dissented since 1993.
“We’re looking at the Fed chair, and that’s down to four people right now,” Trump said Tuesday. “Well, I can tell you because I’ve already said, there’s two Kevins and two other people.”
Interestingly, shortly after 1130ET, the odds of Kevin Warsh becoming The Fed Chair plunged…
…and at the same time, Treasury yioelds spiked across the curve. There was no actual news (headline) catalysts behind either move.
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