Edward Gramlich (search), a member of the Federal Reserve Board since 1997, announced Wednesday that he plans to leave the central bank this summer and return to academia.

Gramlich, 65, submitted his resignation, effective Aug. 31, in a letter to President Bush. Gramlich said he will not attend the Aug. 9 meeting of the Federal Open Market Committee (search), the group that sets interest rate policy in the United States.

His departure will open up a second seat on the 12-member committee for Bush to fill. Federal Reserve Board member Ben Bernanke (search) is moving to the White House staff as chairman of the president's Council of Economic Advisers. The three-member council gives economic advice to the president.

Bush, however, will make his biggest imprint on the Fed when he picks a successor to Federal Reserve Chairman Alan Greenspan (search), who has been at the helm of the Fed since August 1987.

People close to Greenspan said he is expected to step down when his term expires on Jan. 31. Fed watchers said it is possible that Greenspan might stay on a few weeks longer, if needed, until his replacement comes on board, but some doubted he would want to stay on for months.

White House press secretary Scott McClellan on Wednesday wouldn't discuss the president's strategy on replacing Greenspan. "Obviously, we don't speculate on personnel matters," he said.

Greenspan praised Gramlich's contributions to the Fed. "Our deliberations have been enriched by his keen insights, his good humor and his lively mind," Greenspan said.

In September 2002, Gramlich was one of two dissenters from a Fed decision to hold short-term interest rates steady. He wanted an immediate rate cut to help the economy as it struggled at the time with uncertainties heightened by the possibility of war with Iraq. The dissent revealed a rare crack in the unified front the Fed often presents to the public.

Gramlich was first appointed to the Federal Reserve by President Clinton. He was a professor and university administrator at the University of Michigan before joining the Fed. In announcing his resignation, Gramlich said he is leaving to pursue teaching and research interests.

He will become the Richard A. Musgrave Collegiate Professor in the Gerald R. Ford School of Public Policy (search) at the University of Michigan (search). He also will hold a part-time appointment as senior fellow at the Urban Institute.

Gramlich, in his letter to Bush, said his experience at the Fed has been rewarding and challenging. "During my time here I believe we have accomplished much," he wrote. "We have met several difficult monetary challenges and several diverse regulatory challenges."

While Gramlich has served on the Fed, the central bank has dealt with economic threats related to global financial crises, the jolt to the U.S. economy caused by the Sept. 11, 2001, terror attacks and a wave of corporate scandals that rocked Wall Street.