The latest issue between the Trump administration and the Fed sounds more like a family-improved reality TV show.
But the stakes are much higher: the monetary policy of the world’s most important central bank and its independence from political pressures.
This argument is because President Donald Trump continues to ask Jerome Powell to lower interest rates. But Powell and most other Fed policymakers have kept the wait-up approach, saying Trump’s tariffs could see inflation later this year.
Now, the White House accused Powell of making mistakes in the Federal Reserve, a self-financing institution and a renovation of the Central Bank headquarters in Washington, D.C.
exist Letter sent to the head of the Federal Reserve On Thursday, the topic involved in the project cited the overrun of the project and raised questions about its compliance with the National Capital Plan Act, which requires the committee to comply with the committee’s redecoration plan.
Powell’s recent statement said there were no plans for VIP restaurants, new marble, special elevators, new water features or roof terrace gardens, and the suggestion plan changed plans from approval in 2021, and the letter also listed nearly twelve issues with the project.
“While it may inevitably deviate from the approved plan, your testimony appears to indicate that the project does not meet the approved plan for the main design elements,” Vought wrote.
exist Interview on CNBC On Friday, he called for an investigation into the project and said it was time for the Fed to lower interest rates. When asked if the renovation is related to Powell’s position on interest rates, Vought replied: “It’s undoubtedly related to the Fed’s poor fiscal management, and the federal (interest rate) is one aspect.”
National Economic Commission Director Kevin Hassett further raised the ante on Sunday, indicating that Powell’s work could be at risk.
when ABC News Question Hassett said if the renovation could be used as a reason to fire Powell, “I think whether the president decides to push the road down this path will depend to a lot on the answers we get, and we have problems that Russia sends to the Fed.”
Trump has previously denied that he would fire Powell, but he says he should “Resign immediately”,” It is correct to accuse him of misleading lawmakers of the allegations of renovation. Meanwhile, Powell said Trump could not fire him, and the Supreme Court ruled this year that Fed officials had greater protection from being fired.
The board of directors seats will open early next year, which will allow the president to name Powell. But the financial market is Underestimate the risk George Saravelos, head of the strategy for global FX in Germany, said in a report that he may be removed.
Fed responds to White House attack
CNBC Report The Fed has updated FAQ Web Page On Friday, it seems to be refuting the Trump administration’s claims.
The Fed said the renovation would remove asbestos and lead pollution and replace outdated electrical, pipeline, HVAC and fire safety systems. The main structural work will also bring the building to code for accessibility, security and security standards.
It attributes cost overruns to changes caused by consultations with review agencies; the actual costs of materials, equipment and labor; unforeseen conditions like asbestos, toxic pollution in soil and higher than expected groundwater levels.
The FAQ also introduces details like marble, VIP restaurant, new elevator, water features and garden terrace.
Prior to the current project, the Federal Reserve’s Marriner S. Eccles building had never been overhauled before.
“Although regular maintenance and work have been done to make the building occupyable (including a project in the late 1990s), it has not undergone a full renovation since it was built nearly 100 years ago,” the Federal Reserve said.
But even if a new Fed chief is installed that is more aligned with Trump, there is no guarantee that interest rates will drop.
Powell’s term as chairman of the Federal Reserve’s board of directors will expire in May, but his term on the board will be extended until January 2028. This means He is still eligible to serve as chairman of the Federal Open Market Committeewhich determined its own leadership and set the interest rates Trump hoped to lower.
Furthermore, no matter who is a Trump loyalist, he or she still has to work with other consensus-driven FOMCs, and in a note last week, he still has few policy decisions on policy decisions.
If the loyalists take over, and the outliers of monetary policy are too large compared to the rest of the FOMC, the chair could be defeated.
“This will seriously undermine the power of the Fed’s chairman and raise concerns about internal conflicts with the Fed,” Yardeni warned.
