U.S. President Donald Trump could use a new vacancy at the Federal Reserve to appoint his chosen successor to the central bank’s current Chair Jerome Powell, according to analysts at Wolfe Research.

Last week, Fed Governor Adriana Kugler, whose term was due to expire in January 2026, resigned earlier than had initially been anticipated.

Trump has since indicated that he plans to announce his pick to replace Kugler and carry out the rest of her term as soon as this week. Although the Senate -- which is currently on recess -- will not reconvene to approve the appointment until early September, analysts have noted that Trump could still fill the position temporarily.

"This is the one guaranteed vacancy that Trump has on the Fed Board of Governors, which raises the possibility that he will use it to put his intended successor to Powell on the board," the Wolfe Research analysts said in a note.

Speculation has swirled around Powell’s future, fueled in large part by Trump’s repeated attacks on the Fed leader.

Trump has called on the central bank to quickly lower interest rates to boost the economy, but Powell and other policymakers have continued to support a "wait-and-see" approach to future rate actions, citing uncertainty over the impact of the White House’s aggressive tariff agenda on inflation and employment.

Powell’s term is set to expire next May. Should Trump nominate his intended replacement before that date, he could be creating a so-called "shadow Fed Chair" that may undermine Powell’s leadership "sooner rather than later," the Wolfe analysts said.

"We started hearing about the concept of a shadow chair kicking around the Trump campaign policy apparatus last year, and eventually [Treasury Secretary Scott] Bessent, then advising candidate Trump and vying for the Treasury job, publicly put his name to the idea in October," the analysts wrote. "With Bessent publicly supportive of this idea, and Trump’s frustration with Powell only growing over time, we would guess he will welcome the chance to move early."

The strategists led by Tobin Marcus argued that they still expect National Economic Council Director Kevin Hassett to be Trump’s choice to replace Powell, particularly due to Hassett’s "academic expertise and reliable loyalty" to the White House. Other reported contenders include Bessent, former Fed Governor Kevin Warsh and current Fed member Christopher Waller.

"Any of these choices will have a similar import for the near-term rate path, as they’ll have clear marching orders

from Trump on rate cuts," the analysts wrote.