Top man of the Federal Reserve resigns: unrest grows around American interest rate policy

While Donald Trump continues to increase pressure on US interest rate policy, the Federal Reserve is losing one of its best-known managers. Raphael Bostic, president of the regional Fed in Atlanta, has announced that he will leave at the end of February.

His departure comes as the central bank is already grappling with divisions over new interest rate cuts and increased political tension over monetary policy.

Raphael Bostic leaves the Fed

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, has announced that he will retire at the end of February. This ends his term as head of one of the twelve regional central banks of the United States.

Bostic has been in office since 2017 and is considered a historical figure. He is the first African-American and the first openly gay person in this role within the US central banking system. At the Atlanta Fed, he was responsible for the sixth region of the Federal Reserve system, which includes southern states such as Georgia, Florida and Alabama.

During his tenure, Bostic focused on greater economic equality and equal opportunities for all. He was also known as ‘hawkish’. For example, he supported the two recent interest rate cuts in September and October, but at the same time warned of the risks of persistently high inflation. “I am proud of what we have accomplished to make the economy work better for everyone,” Bostic said in his farewell statement.

If a new president is not appointed by the end of February, Cheryl Venable, currently chief operating officer, will temporarily assume leadership of the Atlanta Fed. The search for a successor has now started. According to the board, the new CEO must continue the “critical mission of the central bank”.

Political pressure on interest rate policy is growing

The moment of his departure is sensitive. Donald Trump has been increasing pressure on the central bank for some time now. This week he again lashed out at the interest rate policy, which he believes is too cautious. An important reason is the sky-high US national debt, which now stands at around $38.2 trillion. With the current, relatively high interest rates, interest costs for the government are increasing sharply.

Meanwhile, Washington is also already looking at a possible successor to the chairman of the central bank at the national level, Fed Chairman Jerome Powell, whose term expires in May 2026. The Trump administration has now reduced the list of candidates to five names.

Contenders include Kevin Hassett, Trump’s former top economic adviser, and Kevin Warsh, who previously served as Fed governor. Rick Rieder of asset manager BlackRock is said to have impressed during the discussions with his market knowledge and experience outside the Fed.

Chances of interest rate cuts in December suddenly drop

Contrary to Trump’s wishes, the chance of an interest rate cut in December has decreased considerably. Division has arisen within the Federal Reserve over the appropriate course of action. Some policymakers fear further cuts could reignite inflation, while others point to a weakening labor market.

Due to the recent government shutdown, economic data arrived with a delay, which makes the debate more difficult. While the market previously assumed a more than 90 percent chance of a reduction, this has now fallen to 65 percent.