AP Economics Writer Christopher Al Gaberger
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell has asked an inspector to consider the costs of renovations to the central bank building that White House officials attacked as “stellar.”
A spokesman for the Inspector, an independent watchdog, confirmed the request and declined to comment further. The request was previously reported by Axios.
The Fed has been renovating two Washington office buildings for several years at current costs of $2.5 billion, for several years, $700 million more than originally anticipated. The project was first approved in 2017 by the Fed’s governing committee. Trump administration officials seized the costs and several equipment on the converted building to broaden criticism of Powell, who attacked the president for not reducing the Fed’s short-term rate.
On Thursday, the president’s top budget advisor, Russ Vert, said President Donald Trump was “very troubled” about the “harsh overhaul” and suggested that he could be violating local building rules.
The letter represents a sharp escalation in the Trump administration’s efforts to take more powerful control over the Fed, an independent institution seeking stable prices and maximum employment. Independence from daily politics has long been seen as a key component of the Fed’s ability to achieve these goals.
Trump has repeatedly called for Powell to cut short-term interest rates controlled by the central bank, as he believes the president will reduce government borrowing costs.
Trump threatened to fire Powell in April, but he later retreated those threats after the stock price fell accordingly. Since then, the Supreme Court has shown that the president has no power to remove the Fed chair for disagreements over interest rates.
Laws administering the Fed say chairs could be fired “for a cause.” Powell’s term as a chair ends in May 2026.
Vought’s letter criticizes Powell’s Fed management and suggests that the administration may be trying to file a lawsuit to remove the chair for a cause.
“I don’t think it’s possible yet, but it’s not impossible for Trump to try and replace Powell before his term rises,” said Stephen Moore, former Trump adviser and economist at the Heritage Foundation.
The letter also accused the Fed of altering its building plans without notifying the Washington Planning Commission, known as the National Capital Planning Commission, which could violate the rules. Trump recently appointed two close aides to the committee.
Over the weekend, the Fed said in a “FAQ” post on its website that it “doesn’t follow the committee’s instructions and is voluntarily following the instructions. The Fed also said it is responsible for the Senate and House of Representatives, and is being overseen by independent inspectors rather than by the White House.
The Fed is not directly funded by taxpayers, but instead uses revenue from huge bondholders from banks and fee interest to pay for its business.
In its FAQ, the Fed said the higher the cost of its projects, the higher the cost of materials, labor and equipment. Construction costs have skyrocketed in recent years as a result of the 2022-2023 inflationary spike, the largest in 40 years. The central bank also said more asbestos was discovered than expected, and that it had to comply with Washington height restrictions by building it more underground at the expense of more sacrifices.
At a Senator’s hearing last month, Sen. Tim Scott, a South Carolina Republican and chairman of the Banking Committee, criticized the Fed for “a luxurious renovation” that includes “a rooftop terrace, custom elevators open to the VIP dining room, and (and) a white marble finish.”
However, Powell disputed the characterization: “There are no VIP dining rooms, no new marble… There are no special elevators.” The Fed changed its construction plans in 2023, he added.
The Fed also said in its FAQ that the “garden terrace” mentioned in its 2021 plan document is a “ground-level front lawn” above a parking lot “which will be used to help with stormwater management and increase building efficiency and roof life.”
Meanwhile, Trump attacked Powell again on Monday, saying he was “awful” and “I don’t know what he’s doing.”
Powell has been holding back further cuts considering Trump’s tariffs, and Fed officials say they want to see how import taxes will affect inflation and economic growth.
The Fed’s concern is that if his tariffs actually bring higher prices across the US economy, rate cuts of the size of the Trump discussion could exacerbate inflation. It could also damage economic growth in ways that require interest rate cuts to limit unemployment.
Trump and some of his officials have urged Powell to step down, but there are no indications that he will leave before his term ends in May.
“There is no related illegal activities by the Fed Chairman, with zero evidence to date – which led to a collapse in support in the Senate, so we will not step down with 100% confidence,” Krishna Guha, an analyst at Evercore ISI, wrote on Monday.
AP White House writer Josh Balk contributed to this story.
Original issue: July 14th, 2025, 12:14pm EDT
