Summary:
The Trump administration escalated tensions with Federal Reserve Chair Jerome Powell, accusing him of mismanaging a costly office renovation project that may violate federal law. This comes amid ongoing criticism from President Trump over the Fed’s interest rate policies, which he argues should be lowered to stimulate economic growth. Powell has defended the renovation plans as necessary updates, denying allegations of excessive spending. The dispute highlights broader concerns about Fed independence and fiscal oversight.
What This Means for You:
- Economic Policy Uncertainty: Political pressure on the Fed could lead to volatile market reactions—monitor interest rate decisions closely.
- Inflation Watch: If rates are cut prematurely, consumers may face higher prices for goods and services.
- Regulatory Scrutiny: Federal projects may face stricter audits, potentially delaying infrastructure initiatives.
- Future Outlook: A precedent for challenging Fed independence could destabilize long-term monetary policy.
Original Post:
A top Trump administration official accused Federal Reserve Chair Jerome Powell of leading an “ostentatious” office renovation project that may be “violating the law” on Thursday, a new broadside against the central bank chief as President Trump tangles with him over interest rates.
“The President is extremely troubled by your management of the Federal Reserve System,” Office of Management and Budget Chair Russell Vought wrote in a letter Thursday.
The letter came after months of criticism from Mr. Trump over the Fed’s decision not to slash interest rates. Economists say lowering rates may accelerate economic growth, but also runs the risk of causing inflation to spike. That has led the Fed’s interest rate-setting committee — which Powell chairs — to keep rates steady so far this year after cutting rates slightly last year.
Mr. Trump has called on Powell to resign from his post, and last month, the president called Powell a “numbskull” over his interest rate decisions and said “maybe” he’ll try to fire Powell — though federal law states the Fed chair can only be fired “for cause,” which typically refers to firings due to specific misconduct or performance issues. In the past, Mr. Trump had said he doesn’t plan on trying to fire Powell, whose term as Fed chair ends next year.
Vought’s letter took aim at Powell and the central bank over its years-long office renovation project in Washington, D.C. The letter said plans for the project “called for rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.” Vought also asked whether the Fed has made changes to its plans without seeking approval from a government commission that oversees D.C.-area federal building projects.
CBS News has reached out to the Federal Reserve for comment.
In testimony to the Senate last month, Powell called some descriptions of the renovation project “misleading and inaccurate.” He told lawmakers there isn’t any new marble aside from what’s necessary to replace broken old marble, and said there are no “special elevators,” new water features or rooftop gardens.
“All of the sort of inflammatory things that the media carried are either not in the current plan or just inaccurate,” Powell said.
Vought’s letter argued that comment to the Senate “appears to reveal that the project is out of compliance with the approved plan,” suggesting the Fed may have run afoul of a law requiring D.C.-area projects be approved by the National Capital Planning Commission. In a post on X, the Office of Management and Budget alleged Powell “slipped up and revealed he might…be violating the law.” The Fed’s renovation plans were reviewed by the commission several years ago.
The Fed typically operates with a much higher degree of independence than most other government institutions. Federal law gives the Fed the power to make decisions about acquiring and remodeling buildings in Washington to serve as its office spaces.
The Fed has previously acknowledged that the price tag for its office renovations had jumped due to “significant increases in raw materials costs,” along with higher labor costs.
On its website, the Fed says the two headquarters buildings that are getting overhauled “have not been comprehensively renovated since their construction in the 1930s.” The central bank said there are no private elevators or new VIP dining rooms — instead, the project will refurbish old elevators and conference rooms, including ones that are sometimes “used for mealtime meetings.” It also said plans for new water features were scrapped, though existing fountains will be repaired, and the garden terrace is actually a “ground-level front lawn.”
Last week, Bill Pulte, the Trump-nominated head of the Federal Housing Finance Agency, accused Powell of “deceptive” testimony to the Senate about the office project.
Asked about the allegation in a Cabinet meeting Tuesday, Mr. Trump said: “Then he should resign immediately. We should get somebody in it that’s going to lower interest rates.”
Extra Information:
Federal Reserve Act Section 10: Details legal protections for Fed chairs against political removal.
NCPC Project Files: Official documentation of the Fed’s renovation approvals.
People Also Ask About:
- Can the president fire the Federal Reserve chair? Only “for cause,” per the Federal Reserve Act.
- Why are interest rates controversial? Lower rates boost growth but risk inflation; higher rates curb inflation but slow the economy.
- How independent is the Federal Reserve? Designed to operate free from political pressure, though subject to congressional oversight.
- What’s the cost of the Fed’s renovation? Estimates surged due to material/labor costs, though exact figures are disputed.
Expert Opinion:
“This confrontation underscores a dangerous erosion of institutional norms,” says Dr. Sarah Binder, Brookings Institution governance scholar. “Politicizing Fed operations threatens its ability to stabilize markets during crises.”
Key Terms:
- Federal Reserve independence
- Jerome Powell controversy
- Federal Reserve Act Section 10
- Interest rate policy debate
- Government building renovation costs
- National Capital Planning Commission
- Monetary policy political pressure
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