President Donald Trump says that he has finally found a way to achieve his goal to remove the Federal Reserve chairman Jerome Powell, accusing him of wrongly managing the renovation project of $ 2.5 billion from the US Central Bank.
After a month -long campaign from Trump, the Push comes to try to get rid of the politically independent central banker, who has opposed the president’s calls to defeat the interest rates for concern about the rates of the administration that cause higher inflation levels.
The president indicated on Tuesday that Powell’s handling of an extensive renovation project on two FED buildings in Washington could be a reason to take the unprecedented and possibly legally dubious step to dismiss him. “I think it’s a bit,” said Trump.
“When you spend $ 2.5 billion on, really, a renovation, I think it is really shameful,” Trump said, adding that he never saw the FED chair as someone who needed a “palace”.
The project has been going on for years and goes back to Trump’s first term. But it only recently caught the attention of the White House. Trump claims that lowering the FED rate would lower the costs of borrowing the government, while Powell has warned that an early rate reduction could worsen inflation and ultimately increase those loan costs.
The risk that the FED loses its political independence could possibly undermine the financial markets of America, possibly leading to a collapse of shares and investors who charge a premium to borrow from the US economy.
This is what to know:
Drop off Powell risks make market panic
The FED chair has been an obstacle to Trump’s efforts to gain total control over the executive.
Powell and his board have double mandate to maximize employment and keep prices stable, a task that they may require to make political unpopular movements, such as increasing interest rates to keep inflation under control. The general theory is that the free of the FED of the influence of the White House – unlike nominations of FED officials – makes it possible to fulfill his mission based on what the economy needs, rather than what a politician wants.
An attempt to remove Powell from his work before his term of office ends in May 2026 could undermine the long -term independence of the Fed of daily politics and could lead to higher inflation, higher interest rates and a weaker economy.
The Supreme Court recently indicated that the President Powell cannot fire, simply because Trump does not agree with him about interest rates. But legally he could do this ‘for cause’, such as misconduct or breach of duty.
Trump’s solution seems to be that Powell has incorrectly presented the renovation project in the testimony of the congress and that the costs are excessive, so that his dismissal is stated.
The FED headquarters is more than 90 years old
The Fed says that the head office, known as the Marriner S. Eccles building, urgently needed an upgrade because the electric, sanitary and HVAC systems are almost outdated and what date from the construction of the building in the 1930s.
The renovation will also remove asbestos, lead and other dangerous elements and update the building with modern electrical and communication systems. The H-shaped building, named after a former FED chair in the 1930s and 40s, is located near some of the highest profile monuments of Washington and has references to classical architecture and marble in the facades and stonework. The central bank also renovates a building next to the door that it acquired in 2018.
The Fed says that there has been periodic maintenance of the structures, but adds that this is the first ‘extensive renovation’.
The renovation costs have risen over the years
Trump administration officials have criticized the FED about the costs of the project, which has reached $ 2.5 billion, about $ 600 million more than was originally budgeted.
Just like a besieged homeowner who is confronted with spiral costs for a renovation project, the FED quotes many reasons for the higher costs. The construction costs, including materials and labor, increased sharply during the inflation peak in 2021 and 2022. More asbestos had to be removed than expected. The local limitations of Washington on building heights forced it to build underground, which is more expensive.
In 2024, the FED board canceled its planned renovations of a third building due to the rising costs.
The FED says that the renovations will lower the costs “over time”, because it will be about 3,000 employees established in Washington in fewer buildings and no longer have to rent as much extra space as it is now.
Budget director of the White House calls renovations ‘showy’
Russ Vought, the top budget adviser of the administration, wrote Powell a letter last Thursday, said that Trump is “extremely disturbed” about the “flashy overhaul” of the Fed of her facilities.
The renovation plans of the FED require “Rooftop Terrace Gardens, VIP private dining rooms and lifts, water features, premium marble and much more,” said Vought in his letter.
Powell has disputed the claims, which were published in a paper by the Mercatus Center, a think tank at George Mason University, in March 2025. The newspaper was written by Andrew Levin, an economist at Dartmouth College and former Fed Staffer.
“There is no VIP -aetkamer,” said Powell last month during a hearing of the Senate Bank Committee. “There is no new marble … There are no special lifts. There are no new water features … and there are no roof terrace gardens.”
Some of those elements were removed from the first building plans submitted in 2021, says the Fed.
But the White House also has problems with the FED that reduce its renovation costs
The changes of the FED to its building plans have opened it for another attack line: Suggesting the White House officials that the FED has violated the conditions of the approval that it has received from a local planning committee by changing its plans.
In its approval of the September 2021 project, the National Capital Planning Commission said that it “praises” for “fully fascinating partner federal agencies”. But because the FED has changed its plans, the administration indicates that it is necessary to go back to the committee for a separate approval.
In essence, the White House civil servants say that Powell is reckless with tax money because of the costs of the renovation, but they also accuse him of unethical action by scaling back the project to save money.
James Blair, the deputy Staff Chef of the White House, who called Trump after the committee, said last Thursday in a position on X that Powell’s Congressional Testing of June “leads to the project not in accordance with and approved by the National Capital Planning Commission in 2021.”
Speaking last Thursday during the meeting of the planning committee, Blair said he is planning to visit the construction site, to assess materials of the Fed on how the approved renovation plans from 2021 have changed and distribute a letter among his colleagues on the committee that would go to FED officials.
The FED has asked for an independent assessment of the project
In a series of frequently asked questions on its website, the Central Bank says that “it is not subject to the direction” of the committee and only voluntarily met its guidelines.
Instead, the FED said it is responsible for the Senate and the House of Representatives, and he is also not the White House under the supervision of an independent inspector general. Powell asked the Inspector General to revise the costs of the renovation project.
– Christopher Rugaber and Josh Boak, Associated Press
#Trump #dismiss #Fed #Reserve #chairman #Powell