Trump Administration Demands Answers From Powell Over ‘Lavish’ Fed HQ Renovation, Cost Overrun

Federal Reserve Chair Jerome Powell has come under fire from the Trump administration yet again, but this time, criticism has been leveled at “mismanagement” of funds.

On Thursday, Office of Management and Budget (OMB) Director Russell Vought shared a letter written by him to Powell in which the former pulled up the Fed chair for his “ostentatious overhaul of your Washington D.C. headquarters.”

The “Eccles Building” in Washington, D.C. serves as the central bank’s headquarters. 

In the letter, the White House watchdog stated that the renovation envisioned “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.” It also contended that the project will result in an average of 512 square feet of space per employee, more than three times OMB’s average recommendation of 150 square feet per employee.

“Comparable federal building renovations cost many orders of magnitude less than the office you are building yourself on the taxpayer’s dime,” it added.

Vought said Powell’s June semi-annual monetary policy testimony before the Senate Banking Committee revealed that the project was out of compliance with the plan approved by the National Capital Planning Commission (NCPC) with respect to major design elements. 

He added that “This would bring the project outside of the NCPC’s approval and thus in violation of the NCPA, and require the Fed to immediately halt construction and obtain a new approval from the NCPC, before proceeding any further.”

Vought listed a set of 11 questions and sought answers from the Federal Reserve. The OMB also stated that the project has incurred cost overruns of approximately $700 million to date.

In quotes that accompanied the screenshot of the letter posted on X, Vought said, “Chairman Jerome Powell has grossly mismanaged the Fed.”

“While continuing to run a deficit since FY23 (the first time in the Fed's history), the Fed is way over budget on the renovation of its headquarters.”

Powell, a Trump appointee, has come under harsh criticism from the president himself and his administration for keeping rates steady despite a slowdown in inflation and the tariffs raising recession odds. 

The market’s record run is in part fueled by expectations that the Fed will cut interest rates in the second half of the year. On Thursday, the S&P 500 Index reached a fresh record high, with the SPDR S&P 500 ETF (SPY), which tracks the broader index, closing up 0.28%, bringing its year-to-date gains to 7.42%.

The tech-focused Invesco QQQ Trust (QQQ) exchange-traded fund (ETF) has rallied about 9% this year.

Trump reiterated his calls for a rate cut in a social media post on Thursday. “‘Too Late’ DEMEANS THE GREAT CREDIT OF THE USA. We are now, again, the Number One Credit in the World! ‘Gigantic Comeback,’” he wrote on Truth Social.

“The Fed Rate should be reflective of this. We should be at the top of the list!!! LOWER THE RATE!!!”

Earlier this month, he called for Powell’s resignation, stating in a post that the Fed chief should “resign immediately!!!" At that time, the president shared a link to a Bloomberg article that reported on the Federal Housing Finance Agency Director Bill Pulte’s call for investigating Powell’s “deceptive” testimony about the planned headquarters renovation.

The president, as well as his administration, vigorously called for Powell’s resignation in the aftermath of the “Liberation Day” tariff announcement in April, as inflationary pressure began to tick down. They, however, toned down the rhetoric after the markets reacted negatively to it. 

Powell’s argument against a rate cut is the lack of clarity on how Trump’s tariff implementation would play out. That said, dissent among Fed members has been brewing lately, with the Fed minutes released on Wednesday confirming this. 

The next rate-setting meeting is scheduled for July 30-31, with the CME FedWatch tool showing odds of a rate cut at merely 4.7%. The futures market, however, has factored in rate cuts at the three remaining meetings of the year. 

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