A vacancy on the Fed is opening early as Trump urges board to ‘assume control’ if Powell doesn’t cut rates

Economy·Federal ReserveA vacancy on the Fed is opening early as Trump urges board to ‘assume control’ if Powell doesn’t cut ratesBy Marco Quiroz-GutierrezBy Marco Quiroz-GutierrezReporterMarco Quiroz-GutierrezReporterRole: ReporterMarco Quiroz-Gutierrez is a reporter for Fortune covering general news.SEE FULL BIO Federal Reserve Chairman Jerome Powell.Chip Somodevilla—Getty ImagesPresident Trump erupted on social media after the Federal Reserve held interest rates steady this week

The president called on the board to “assume control” and lower interest rates on the same day a Biden-appointed Fed governor announced her resignation

Experts say Trump’s understanding of the interest rate decision is misguided and a revolt against Powell is unly

Fed Governor Adriana Kugler announced Friday she is stepping down from her position earlier than expected, giving President Donald Trump the chance to expand his influence over the central bank as he calls for a revolt against Chairman Jerome Powell

In a post on Truth Social before Kugler’s announcement, President Trump took a jab at Powell, saying he must “substantially” lower interest rates, after the Federal Open Market Committee voted overwhelmingly to keep rates unchanged. “IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE,” Trump added in the post

Kugler said she would resign her position on Aug. 8, earlier than her expected departure in January when her term on the board of governors expires

She plans to return to Georgetown University as a fessor this fall, according to a press release

Kugler’s departure gives Trump a relished opportunity to nominate a voting member to the FOMC and expand his influence

The FOMC sets the federal funds rate that Trump has been saying needs to come down

The committee is made up of the seven governors who serve on the Fed board, the New York Fed president, and four rotating regional Federal Reserve bank presidents

It marked a rare break in what’s a typically unanimous vote, but it was far from a mutiny, said Michael Ashley Schulman, the chief investment officer of Running Point Capital Advisors

Because interest rate decisions are decided by a simple majority vote by the FOMC’s 12 voting members, it’s possible Powell, who only gets one vote and no veto power, could be overridden

But it’s not ly, said Schulman. “A handful of dissents shows the committee can grumble, but a successful revolt would need at least seven ‘nays’ against Powell, an inside-the-Fed version of turning the Succession board on Logan Roy,” he told Fortune, referring to the TV show a corporate power struggle. “Odds remain low unless the data roll over hard or new appointees tip the balance.” Trump’s attacks on the Fed and Powell have escalated in his second term

And his constant insistence on lower rates and previous threats to appoint Powell’s successor, have put pressure on the Fed to exert its independence

Yet, Powell still has ways he can fight back against Trump’s influence, if he chooses to, said Mark Spindel, senior adviser at F/m Investments and a co-author of The Myth of Independence: How Congress Governs the Federal Reserve

Powell has repeatedly declined to say whether he intends to stay on as Fed governor after his term as chairman ends

It’s also un how Trump will react if the Fed cuts rates

The economy has been largely resilient in spite of uncertainty caused in part by the threat of tariffs on major U.S. trading partners, but cracks have started to emerge

The U.S. economy added only 73,000 jobs last month, and gains in June and May were revised down sharply, according to the Bureau of Labor Statistics

The new numbers were so stunning they up the earlier narrative that the labor market was remarkably shock of, which has colored the Fed’s stance on rates

In the press conference ing the Fed’s decision to keep rates unchanged, Powell hesitated to guide toward a rate in the coming months

He struck a hawkish tone, according to a note by Bank of America’s macroeconomics team, putting a damper on investor hopes that the FOMC’s next meeting in September could bring a rate cut. “It seems to me — and to almost the whole committee — that the economy is not performing as though restrictive policy is holding it back inappriately,” Powell said

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