On July 10, 2025, the Trump administration escalated its campaign against Federal Reserve Chair Jerome Powell, accusing him of mismanaging the central bank and potentially breaking the law over a costly renovation project of the Fed’s Washington, D.C. headquarters. The accusations, spearheaded by Russell Vought, director of the Office of Management and Budget (OMB), came amid ongoing tensions between President Donald Trump and Powell over the Federal Reserve’s cautious approach to interest rate adjustments.
Vought’s letter, publicly posted on social media, sharply criticized Powell’s leadership, stating, “The President is extremely troubled by your management of the Federal Reserve System.” The letter condemned the renovation plans as an “ostentatious overhaul” featuring extravagant elements such as rooftop terrace gardens, VIP private dining rooms, elevators, water features, and premium marble. Vought questioned whether the Fed had made unauthorized changes to the project without approval from the National Capital Planning Commission (NCPC), the government body overseeing federal building projects in the D.C. area.
This development follows months of President Trump’s vocal dissatisfaction with Powell, whom he appointed during his first term. Trump has repeatedly criticized Powell’s handling of the economy, particularly his reluctance to cut interest rates amid cooling inflation. Trump even nicknamed him “Too Late” and recently suggested Powell should resign. The president’s frustration culminated in a handwritten letter sent to Powell just two weeks prior, demanding lower interest rates.
Despite the pressure, Powell has maintained a firm stance, emphasizing the Fed’s commitment to taming inflation and preserving the labor market’s health. He testified before the Senate in late June, pushing back against claims that the renovation was excessive or lavish. Powell denied the existence of a VIP dining room, new marble, special elevators, or rooftop gardens, calling such descriptions “misleading and inaccurate.”
However, Vought’s letter challenged Powell’s testimony, alleging it “appears to reveal that the project is out of compliance with the approved plan,” potentially violating laws requiring NCPC approval. The OMB’s post on X (formerly Twitter) suggested that Powell “slipped up and revealed he might...be violating the law.” These claims add a new dimension to the ongoing feud, intertwining concerns over fiscal responsibility with legal compliance.
Adding to the scrutiny, Bill Pulte, the Trump-nominated head of the Federal Housing Finance Agency, accused Powell of “deceptive” testimony regarding the renovation. Peter Navarro, senior counselor for trade and manufacturing, also recently labeled Powell one of the worst Fed chairs in history. Alan Blinder, a former Fed vice chair, observed that the administration appears to be pressuring Powell to resign but expressed doubt that Powell would step down voluntarily or that he should.
Behind the scenes, sources told CNN that the Trump administration replaced three members of the NCPC with loyalists, including White House Secretary Will Scharf, Deputy Chief of Staff James Blair, and OMB analyst Stuart Levenbach. At an NCPC meeting on July 10, Blair expressed concern that the renovation project was not aligned with the approved plans and requested a full set of current plans and amendments since the original 2021 approval, along with a site visit. Blair stated, “The project is either out of alignment with the plans originally submitted and approved, or Chair Powell was dishonest with the Senate Banking Committee in testimony on 6/25. One of two things has to be true.”
When asked about potential consequences if Powell was found to have lied, Blair said it would be “extremely concerning and demonstrate a casual disregard for the law and good sense.” Yet, a White House official told CNN that the president’s attacks on Powell are more a venting of frustration than a calculated move to prepare for firing him. The official denied any broader scheme to oust Powell through the OMB’s investigation.
The renovation project itself has seen its estimated cost balloon from $1.9 billion to approximately $2.5 billion this year. A 2023 Fed budget document attributed the increase to “significant increases in raw materials… higher labor costs, and changes in construction schedule expectations which lengthen use of leased space.” While the Fed typically operates with a high degree of independence and has its own budget and rules separate from the federal government, these rising costs have become a focal point for critics.
Beyond the renovation controversy, the core of the administration’s ire remains the Fed’s interest rate policy. While some global central banks, such as the European Central Bank and the Bank of Mexico, have lowered benchmark lending rates several times in 2025, the Fed has held rates steady since December 2024. Trump and his allies argue this decision is politically motivated and have expressed a preference for a Fed chair who will aggressively cut rates.
Powell, however, has indicated that the Trump administration’s tariff policies have influenced the Fed’s decisions. In early July, Powell acknowledged that the Fed might have cut rates earlier if not for significant policy changes by the administration, saying, “I do think that’s right.” Nonetheless, he noted that a majority of Fed officials expect rate reductions later in 2025, though the timing remains uncertain.
Market analysts warn that firing Powell could have destabilizing effects. Ed Mills, a policy analyst at Raymond James, suggested that the administration might be laying the groundwork to justify firing Powell “for cause,” a legally required reason that could overcome the Fed chair’s usual protections. Mills cautioned that such a move could undermine market confidence and the perceived independence of the Federal Reserve, potentially causing interest rates to rise rather than fall.
Alan Blinder echoed these concerns, emphasizing that replacing Powell with a chair pledging to lower rates could raise inflationary expectations and unsettle financial markets. Trump has hinted he may soon announce his pick to succeed Powell when his term ends in May 2026, adding another layer of uncertainty to the Fed’s future direction.
As the battle between the Trump administration and Jerome Powell intensifies, the stakes extend beyond personalities and politics. At issue are the independence of the nation’s central bank, the management of taxpayer funds in major renovation projects, and the delicate balance of monetary policy amid a recovering economy. With investigations underway and political pressure mounting, the coming months will be critical in shaping the Federal Reserve’s path forward and its role in steering the U.S. economy.
