President Donald Trump appears to have adopted a new strategy in trying to force Federal Reserve Chair Jerome Powell to resign before his term ends next year. Trump is now criticizing Powell over what he believes is the exorbitant cost of renovations at the Federal Reserve headquarters in Washington.
“When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful,” Trump said Tuesday, July 15. “I think it sort of is” grounds for firing Powell, he added.
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Powell recently asked the central bank’s inspector general to review the project’s cost, CNN reported.
Trump’s anger over unchanged interest rates
Trump has floated the idea of firing Powell, who has steered the Fed toward keeping interest rates at their current level due to possible inflationary effects of the president’s tariffs on imported goods.
The president has referred to the Fed chair as “Too Late Powell” and repeatedly pressured him through social media to support a rate cut. On Tuesday, after the Commerce Department reported that the inflation rate rose to 2.7% in June, Trump wrote on Truth Social, “Fed should cut Rates by 3 points. Very Low Inflation. One Trillion Dollars a year would be saved!!!”
Powell has refused to give in, insisting that a premature rate cut could make inflation worse and negatively affect borrowing costs. The federal funds rate, which banks charge each other, has remained between 4.25% and 4.5%. That rate held steady for a fourth consecutive meeting of the Federal Reserve in June. Some analysts, according to CNBC, foresee a couple of rate cuts in the second half of 2025.
Theoretically, the Fed is expected to make decisions on the U.S. economy free of political influence, although its chairman and governors are presidential appointees.
Trump appointed Powell during his first term in the White House; the chairman’s term ends next May.
Replacing a Fed chair
Trump could fire Powell for cause, such as misconduct or dereliction of duty, according to The Associated Press. However, such a move could send the stock market spiraling downward due to the turmoil.
Trump is now focusing on the years-long renovation project. The Fed’s headquarters, built in the 1930s and located near some of Washington’s high-profile monuments, required repairs due to the age of its electrical, plumbing, and heating and cooling systems. It also had asbestos, lead and hazardous materials issues. The Fed is also renovating a building it acquired next door.
The renovation’s price tag has hit $2.5 billion — reportedly about $600 million over budget.
Powell has called reports that he misrepresented the cost of the renovation “misleading and inaccurate.”
“There’s no VIP dining room,” he recently told the Senate Banking Committee. “There’s no new marble. There’s no special elevators. There are no new water features, and there’s no roof terrace gardens.“
