Trump Considers Firing Powell Over $700 Billion Fed Renovation Cost Overruns

Kevin Hassett, the White House economic adviser, stated on July 13, 2025, that President Trump is considering dismissing Federal Reserve Chair Jerome Powell due to alleged cost overruns in the renovation of the Fed's headquarters. The potential removal is centered around the administration's concerns about fiscal management within major financial institutions, which could impact macroeconomic confidence.

Hassett highlighted that the White House is considering changes in Federal Reserve leadership, specifically targeting Jerome Powell. This consideration follows alleged $700 billion cost overruns on the Fed’s Washington HQ renovation, which could involve President Trump’s intervention. The leadership shift suggests potential volatility in U.S. financial markets due to uncertainties surrounding central banking policies. The situation underscores fiscal discipline concerns amid speculative macroeconomic impacts, though no immediate changes are evident.

Any decision by Trump to try to fire Powell over what the Trump administration calls a $700 billion cost overrun is going to depend a lot on the answers that we get to the questions that Russ Vought sent to the Fed. The Trump administration has intensified its scrutiny on the Federal Reserve's $2.5 billion renovation project for its headquarters, considering it a potential "cause" for dismissing Federal Reserve Chairman Jerome Powell. National Economic Council Director Kevin Hassett suggested that President Trump has the authority to remove Powell if there is sufficient evidence of mismanagement. This development comes amid ongoing tensions between the White House and the Federal Reserve, with Trump repeatedly calling for lower interest rates.

The White House has accused Powell of mismanaging the renovation project, citing cost overruns and potential non-compliance with the National Capital Planning Act. Office of Management and Budget Director Russell Vought sent a letter to Powell raising questions about the project's compliance and requesting detailed answers. Vought also called for an investigation into the project, linking it to the broader issue of the Fed's fiscal mismanagement, which includes interest rate policies.

Powell has maintained that the renovation project is necessary to address safety and accessibility issues in the Fed's nearly century-old headquarters. The Fed updated its frequently asked questions page to rebut the White House's claims, stating that the project aims to remove asbestos and lead contamination, replace outdated systems, and bring the building up to code. The Fed attributed cost overruns to unforeseen conditions and consultations with review agencies.

Hassett's comments on ABC News further escalated the situation, indicating that Powell's job could be at stake depending on the Fed's responses to the White House's questions. Trump has previously denied plans to fire Powell but has criticized him for not lowering interest rates. Powell, however, has stated that Trump cannot fire him without cause, and the Supreme Court has ruled that Fed officials have greater protections from termination.

The potential dismissal of Powell raises questions about the independence of the Federal Reserve and the impact on monetary policy. If Trump were to replace Powell with a more aligned candidate, it would not guarantee lower interest rates, as the Federal Open Market Committee (FOMC) determines its own leadership and sets monetary policy through a consensus-driven process. The situation highlights the ongoing tension between the Trump administration and the Federal Reserve, with the White House accusing Powell of mismanagement and the Fed defending its actions. The outcome of this dispute could have significant implications for monetary policy and the independence of the central bank.