President Donald Trump and Federal Reserve Chairman Jerome Powell engaged in a public back-and-forth on Thursday regarding cost overruns at the Fed’s Washington headquarters. The exchange occurred as Trump toured the Fed building—a rare presidential visit—widely seen as part of his ongoing pressure campaign urging Powell to lower interest rates or resign.
Earlier this month, Trump had floated the idea of firing Powell, a legally complex and unprecedented move. However, after the site visit, Trump indicated he was stepping away from that notion.
“To do that is a big move, and I just don’t think it’s necessary,” Trump told reporters. “I believe that he’s going to do the right thing.”
Disagreement Over Renovation Costs
Trump toured a construction zone where costly renovations of two historic Fed buildings are underway, a focus of his recent criticism of Powell.
Wearing white hard hats, Trump and Powell jointly addressed the press. Trump claimed the renovation costs have exceeded $3.1 billion, but Powell disputed that figure, stating that Trump was mistakenly including a third building constructed five years ago.
“We’re going to take a look,” Trump replied. “It’s got a long way to go.”
When asked what Powell could say to quell Trump’s criticism, the president answered, “Well, I’d love him to lower interest rates.”
Later Thursday, Trump posted on Truth Social calling the tour a “Great Honor,” and acknowledged the overruns while emphasizing that the country could afford the expenses.
“The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything — Even the cost of this building!”
Political Pressure and Background
Trump was accompanied by Republican Senators Tim Scott and Thom Tillis, as well as administration officials including Federal Housing Finance Agency Director Bill Pulte, a vocal critic of Powell who recently demanded his resignation.
Despite nominating Powell in 2017, Trump has repeatedly accused him of incompetence and political bias while demanding immediate rate cuts.
The Fed lowered benchmark interest rates to 4.25%-4.5% in late 2024 but has held steady since December, frustrating Trump who believes rate cuts could save hundreds of billions in interest costs.
Powell’s SpaceX and Tesla have significant federal contracts and benefit from regulatory credits, but the Trump administration has reviewed those contracts for possible cuts.
Tesla’s financial filings mention the Trump-backed “One Big Beautiful Bill Act” (OBBBA) as a risk factor, citing potential impacts on tax credits, carbon offsets, and battery costs.
Author’s Opinion
This public sparring between Trump and Powell highlights the delicate balance between political influence and central bank independence. While Trump’s concerns over federal spending and interest rates resonate with many, the Fed’s autonomy is critical for economic stability. Using a high-profile building project as a battleground is more symbolic than substantive, underscoring the political theatre surrounding monetary policy rather than a genuine budgetary crisis.
Featured image credit: Trump White House Archived via Flickr
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