Trump Demands Powell Resign Amid Fed Renovation Controversy

President of the United States, Donald Trump, has publicly expressed his desire for Federal Reserve Chairman Jerome Powell to resign, stating that it would be beneficial if Powell stepped down. Trump has repeatedly called for Powell's resignation, citing various reasons including the Fed's handling of interest rates and recent allegations of mismanagement related to renovations at the Federal Reserve's headquarters in Washington, D.C. Trump has also suggested that Powell should resign if allegations that he lied to lawmakers about the renovations prove true.

The White House has accused Powell of mismanaging the renovation project, which includes cost overruns and potential non-compliance with the National Capital Planning Act. The Office of Management and Budget Director Russell Vought sent a letter to Powell raising questions about the project's compliance and cost overruns. Powell has denied these allegations, stating that there are no plans for a VIP dining room, new marble, special elevators, new water features, or a rooftop terrace garden. The Fed has updated its frequently asked questions webpage to address these claims, stating that the renovation is necessary to remove asbestos and lead contamination, replace outdated systems, and bring the building up to code.

Trump's calls for Powell's resignation come amid a broader dispute over monetary policy. Trump has repeatedly demanded that Powell lower interest rates, but Powell and most other Fed policymakers have maintained a wait-and-see approach, citing concerns that Trump's tariffs could stoke inflation later this year. The dispute has raised questions about the independence of the Federal Reserve from political pressure.

White House economic adviser Kevin Hassett has stated that Trump has the authority to fire Powell if there is a reason to do so. However, Powell has stated that Trump cannot fire him, and the Supreme Court ruled this year that Fed officials have greater protections from being terminated. A seat on the board of governors will open up early next year, allowing the president to name a potential replacement for Powell. However, even if a new Fed chair is appointed, they must still work with the rest of the consensus-driven Federal Open Market Committee, where it is rare to have even a few dissenters on a policy decision. This means that a new Fed chair who is more aligned with Trump's views may still face challenges in implementing policy changes.