Trump Seeks Powell Removal Over $2.5 Billion Fed Renovation

President Donald Trump has found a potential way to remove Federal Reserve Chair Jerome Powell, accusing him of mismanaging the central bank’s $2.5 billion renovation project. This move comes after months of Trump's efforts to oust Powell, who has resisted the president’s calls to lower interest rates due to concerns about inflation sparked by the administration’s tariffs.

Trump indicated that Powell’s handling of the renovation project on two Fed buildings in Washington could serve as grounds for his dismissal. The president criticized the extensive cost, stating, “When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful.” The project, which has been underway for years, has only recently caught the White House’s attention. Trump believes that Fed rate cuts would lower government borrowing costs, while Powell has warned that premature rate cuts could worsen inflation and ultimately raise those costs.

The risk of the Fed losing its political independence could undermine America’s financial markets, potentially leading to a meltdown in stocks and investors charging a premium to lend to the U.S. economy. Powell and his board have the dual mandate of maximizing employment and keeping prices stable, which can require them to make politically unpopular moves. The general theory is that keeping the Fed free from the influence of the White House allows it to fulfill its mission based on what the economy needs, instead of what a politician wants.

An attempt to remove Powell from his job before his term ends in May 2026 would undercut the Fed’s long-standing independence from day-to-day politics and could lead to higher inflation, higher interest rates, and a weaker economy. The Supreme Court recently signaled that the president can’t fire Powell simply because Trump disagrees with him on interest rates. However, legally, he could do so “for cause,” such as misconduct or dereliction of duty. Trump’s workaround appears to be that Powell misrepresented the renovation project in congressional testimony and that the cost is excessive, thus meriting his dismissal.

The Fed’s main headquarters, known as the Marriner S. Eccles building, was in dire need of an upgrade because its electrical, plumbing, and HVAC systems, among others, are nearly obsolete and some date back to the building’s construction in the 1930s. The renovation will also remove asbestos, lead, and other hazardous elements and update the building with modern electrical and communications systems. The central bank is also renovating a building next door that it acquired in 2018. The Fed says there has been periodic maintenance to the structures but adds that this is the first “comprehensive renovation.”

The renovation costs have ballooned over the years, reaching $2.5 billion, about $600 million more than was originally budgeted. The Fed cites many reasons for the greater expense, including sharp rises in construction costs during the inflation spike in 2021 and 2022, the need to remove more asbestos than expected, and Washington’s local restrictions on building heights, which forced it to build underground. In 2024, the Fed’s board canceled its planned renovations of a third building because of rising costs. The Fed says the renovations will reduce costs “over time” because it will be able to consolidate its roughly 3,000 Washington-based employees into fewer buildings and will no longer need to rent as much extra space as it does now.

The administration’s top budget adviser, Russ Vought, wrote Powell a letter stating that Trump is “extremely troubled” about the Fed’s “ostentatious overhaul” of its facilities. The Fed’s renovation plans call for “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more,” Vought said in his letter. Powell has disputed these claims, stating that there are no VIP dining rooms, new marble, special elevators, new water features, or roof terrace gardens. Some of those elements were removed from initial building plans submitted in 2021, the Fed says.

White House officials also take issue with the Fed reducing its renovation costs, suggesting that the Fed violated the terms of the approval it received from a local planning commission by changing its plans. In its September 2021 approval of the project, the National Capital Planning Commission commended the Fed for “fully engaging partner federal agencies.” However, because the Fed changed its plans, the administration is indicating it needed to go back to the commission for a separate approval. Essentially, White House officials are saying Powell is being reckless with taxpayer money because of the cost of the renovation, but they are also accusing him of acting unethically by scaling back the project to save money.

The Fed has asked for an independent review of the project, stating that it is “not subject to the direction” of the commission and has only complied with its directives voluntarily. Instead, the Fed said it is accountable to the Senate and House of Representatives and is also overseen by an independent inspector general, not the White House. Powell has requested a review of the costs of the renovation project.