The confrontation between Donald Trump and Federal Reserve Chairman Jerome Powell escalated over cost overruns in the renovation of the Fed’s headquarters in Washington. Trump’s visit to the construction site turned into an open confrontation in front of cameras, with the former president directly challenging the Central Bank’s financial figures. “The $2.7 billion has become $3.1 billion,” Trump declared, accusing the Fed of luxurious waste. Powell, wearing a hard hat like the American president, immediately reacted, denying that the amount corresponds to the actual cost. “That’s a third building that’s not included in the project. The Martin Building was completed five years ago,” he responded, implying that Trump arbitrarily incorporated an earlier expense into the amount.
The renovation of the Washington buildings, approved in 2017, proved particularly complex due to historical characteristics, while committees that included Trump-appointed officials demanded more marble on the facades of the new wings.
Trump-Powell: The chronicle of the dispute over Fed headquarters renovation
The scene was characteristic of the tense relationship between the two men, with Trump insisting that the project “is luxurious” and Powell emphasizing that “the project will be completed in 2027 and no new overruns are expected.” He notably pointed out that a large part of the cost is due to material price increases caused by tariffs imposed by the Trump administration on steel and aluminum.
Despite the Fed’s assurances that this is not a “luxury project,” Trump has characterized the expenses as “shameful” and has repeatedly insulted Powell, calling him a “mule” and “anti-Trump.” However, removing the Fed chief before his term expires in 2026 would seriously undermine the Central Bank’s independence and cause significant market disruption.
Although the Republican president has often hinted that he would dismiss Powell, this time he stated: “I don’t think it’s necessary. I believe he will do the right thing.” However, he repeated his standing demand for interest rate cuts: “I want a simple thing to happen – lower interest rates.”
The Fed has maintained interest rates at 4.3% this year, following three cuts last year, while Powell states that the Central Bank needs time to study the consequences of Trump’s tariff policies on the economy and inflation.
