This week, tempers flared between the Trump administration and Federal Reserve Chairman Jerome Powell over the Fed’s interest rate policy. The White House accused Powell of mismanaging the Federal Reserve, particularly in light of a much criticized, under fire renovation project. OMB Director Russell Vought went further, calling the planned renovation unnecessary and excessive in a widely circulated public scolding. Yet it has apparently gone about $700 million over budget. This criticism marks another significant uptick in the administration’s campaign against Powell. He’s held the line against all the pressure to cut interest rates, even in the face of continued personal attacks.
Vought articulated these concerns in a detailed letter posted on X. He criticized the renovation as an “ostentatious overhaul,” and accused Powell of “grossly mismanaging the Fed.” Vought says she wants to look into the renovation project. They would like to get to the bottom of why it is so ridiculously expensive, and why it consistently blows through its budgets.
“We want to make sure we have facts as to the largesse and the extent to which it’s overrun.” – Russell Vought
The museum’s local and international reputational damage is due in part to the exorbitance of the renovation. It seeks to restore and rehabilitate the conference rooms now located in the Eccles Building without constructing additional VIP dining facilities. Specifically, the Federal Reserve said not to build them a new VIP dining car for the project. Instead, they’re making the most of the spaces they already have.
“Eccles has all these conference rooms, and the renovations, and the preservation of Eccles, base of our community.” Additionally, they are used for dinnertime convening,” a representative from the Federal Reserve said. The comments are intended to set a record straight about the scope and intention of the renovations against underlying and persistent criticisms.
These charges go well beyond fiscal mismanagement. This is significant, given that President Trump has repeatedly accused Powell of being political himself by resisting calls to lower interest rates. He argues that this attitude hurts the long-term growth of the economy. In so doing, Trump has outbolded them all by calling for Powell’s resignation. He is right to say Powell must be held responsible for his actions.
So far Powell has held firm against these pressures, decisively asserting his independence as Fed Chair. His term ends next year. As tensions continue to escalate, so too is the speculation about his imminent replacement. Yet the administration’s recent actions create the appearance of a concerted effort to force Powell from his post before his term expires in 2018.
In response, the Federal Reserve gave a vigorous defense of the renovation project, pointing to a number of major factors that increased costs. One of the biggest drivers was revisions to the initial building designs following review agency consultation. These comments, from notable critics of public extravagance, help defend against charges that the project is too lavish.
The military’s investigation into the renovation continues. Nonetheless, it’s anyone’s guess how this war will play out, both on Powell’s long-term term at the Federal Reserve and its impact on the economy. Coupled with increasing criticism from the White House and continued pressure to reconsider interest rate hike decisions, Powell has a tough road ahead of him.