The Federal Reserve Council is faced with new turbulence while Adriana D. Kugler resigns in the midst of political tensions. His departure comes when President Donald Trump intensifies his efforts to influence the decisions of the Fed.
In short
- Kugler's resignation adds uncertainty to the management of the Fed, against the backdrop of political interference.
- Trump's influence on the next Fed appointments could influence the orientation of monetary policy.
- The concern of the markets grows while the Fed is resistant to the rate reductions, despite inflation and increasing political pressure.
Kugler's early departure revives concerns about the stability of the federal reserve
While Jerome Powell continues to be asked about his management and his choices in terms of interest rates, Kugler's resignation throws doubt about the future and independence of the institution. She will officially leave her post as a voting member of the Open Market Federal Committee (FOMC) August 8.
She plans to resume her university activities in Georgetown, thus ending an anticipated way to a mandate which was to end in January. If his official announcement insists on his pride of having served as a civil servant, several analysts see it as a signal within political scope.
Trump wants to strengthen his grip on the Fed
Kugler's departure now offers Trump the opportunity to appoint a new member to the Fed Governors' Council, who has seven. This change may be enough to influence monetary policy to more marked rate drops. Trump regularly criticizes the Fed, believing that it should reduce rates to facilitate credit access and stimulate the economy.
In June, he expressed his annoyance in the face of Powell's resistance, going so far as to evoke the idea, certainly improbable, to name himself. This declaration nevertheless reflects its increasing intention to intervene in the affairs of the Central Bank. In several Messages published on Truth Socialhe also denounced the Fed's decision to maintain unchanged rates at its July meeting.
The independence of the Fed under pressure
The independence of the central bank has long been a pillar of American economic policy, but this principle seems more and more threatened.
The offensive tone adopted by Trump and his public positions reflect a desire to weaken this institutional separation. Many economists fear the long -term consequences on Fed's credibility and financial stability.
Beyond political pressure, the Fed continues to fight against tenacious inflation. Data published earlier this week revealed unexpected price increases. While the markets anticipated rate drops, the central bank preferred to be caution, causing capital outlets and a fall in asset prices, including that of Bitcoin.
Maximize your Cointribne experience with our 'Read to Earn' program! For each article you read, earn points and access exclusive rewards. Sign up now and start accumulating advantages.
