President Trump is not a fan of Federal Reserve Chair Jerome Powell, but the president insists that he won't fire him before his term ends next spring. However, a new White House investigation is fueling speculation that he may reconsider, reports Politico. The probe centers on the $2.5 billion renovation of the Fed's headquarters in DC and suggests the administration is seeking grounds—beyond monetary policy disputes—to remove Powell for alleged mismanagement, per the Wall Street Journal.
The White House has repeatedly criticized Powell for not cutting interest rates, but this latest move pivots to focus on administrative issues, specifically cost overruns on the project and whether Powell misled Congress about it. White House Budget Director Russ Vought says those cost overruns are "horrifying" and are under investigation. Some analysts, including Karen Petrou of Federal Financial Analytics, view the investigation as an attempt to build a case for firing Powell "for cause," sidestepping legal protections for the Fed's independence.
The renovation reportedly grew more expensive due to design changes, asbestos removal, and inflation—the same inflation Powell cites for keeping rates higher. Critics note that cost overruns are typical for renovations of historic buildings and argue that tying Powell's fate to the project's expenses could be seen as a pretext for installing a more compliant Fed chair.
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