Trump Considers Firing Powell Over Fed Renovation Cost Overruns

US President Donald Trump has once again raised the possibility of dismissing Federal Reserve Chairman Jerome Powell. National Economic Council Director Kevin Hassett suggested that Trump may fire Powell due to significant cost overruns on the Fed's headquarters renovation project in Washington. This development comes amidst long-standing pressure from the Trump administration on Powell to cut interest rates, which has sparked concerns about the Fed's independence.

Hassett's statements indicate that the White House is considering this option, despite Trump's previous assertion that he would not fire Powell. The White House has accused the Fed of a $700 million budget overrun on the renovation project. Office of Budget and Management Director Russ Vought sent a letter to Powell on July 10, questioning the project's legality and requesting a response within seven business days, which falls at the end of this week. This timeline could provide Trump with an opportunity to take action before the next Fed meeting on July 29.

When asked about the possibility of Trump firing Powell, Hassett stated that it is "under review" and that Trump could do so if there is a justification. This comes as speculation grows that Hassett himself could be a potential successor to Powell. Economic circles view Hassett as a strong candidate due to his influential role in the White House.

The legal framework for removing a Federal Reserve chairman is intricate. While the Supreme Court has restricted the president's ability to fire central bankers over policy disagreements, Powell could be removed "for cause," which requires demonstrating serious misconduct or malfeasance. Legal experts suggest that the cost overruns on the renovation project could potentially serve as evidence of such misconduct, providing Trump with a grounds for dismissal.

Trump has been openly critical of Powell's monetary policies, particularly his reluctance to lower interest rates. The president has expressed a preference for a Fed chair more aligned with his economic agenda. However, Trump has also stated that he does not intend to fire Powell before his term ends in May 2026, suggesting that while he may be exploring his options, immediate action is not planned.

This situation underscores the ongoing tension between the White House and the Federal Reserve. Trump's criticism of Powell has been well-documented, and his allies have been vocal in their support. However, the legal and political challenges to removing a Federal Reserve chairman are substantial, and it remains uncertain whether Trump will ultimately succeed in his efforts to replace Powell.