How Trump could use building renovation to oust Fed chair

WASHINGTON

FILE - The Federal Reserve Board Building is seen as it undergoes renovations, June 10, 2025, in Washington, DC. (Pablo Martinez Monsivais, file)

President Donald Trump says he has finally found a way to achieve his goal of removing Federal Reserve Chair Jerome Powell, accusing him of mismanaging the U.S. central bank’s $2.5 billion renovation project.

The push comes after a monthslong campaign by Trump to try to rid himself of the politically independent central banker, who has resisted the president's calls to slash interest rates out of concerns about the administration's tariffs sparking higher levels of inflation.

The president indicated on July 15 that Powell’s handling of an extensive renovation project on two Fed buildings in Washington could be grounds to take the unprecedented and possibly legally dubious step of firing him. “I think it sort of is,” Trump said.

“When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful,” Trump said, adding that he never saw the Fed chair as someone who needed a “palace.”

The project has been underway for years, going back to Trump’s first term. But it only recently caught the White House’s attention. Trump maintains that Fed rate cuts would lower the costs of government borrowing, while Powell has warned that a premature rate cut could worsen inflation and ultimately raise those borrowing costs.

The risk of the Fed losing its political independence could undermine America’s financial markets, possibly leading to a meltdown in stocks and investors charging a premium to lend to the U.S. economy.

The Supreme Court recently signaled that the president can’t fire Powell simply because Trump disagrees with him on interest rates. But 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 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.

Trump administration officials have criticized the Fed over the project's expense, which has reached $2.5 billion, about $600 million more than was originally budgeted.

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.