President Donald Trump’s pressure campaign against the Federal Reserve and Chair Jerome Powell to lower interest rates entered a new front this week.
The latest line of attack comes from Office of Management and Budget Director Russell Vought, who wrote to Powell on Thursday to call out the renovation of the Federal Reserve’s Washington headquarters.
“The President is extremely troubled by your mismanagement of the Federal Reserve System,” Vought wrote in a letter posted to X. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C. headquarters.”
Asked by reporters Friday if he planned to fire the Fed chief, Trump said “no.” But fears persist. Trump’s attacks against Powell have been unrelenting, calling him everything from “very stupid” to insulting him as a “low IQ” person, and even saying, “I think he hates me.”
Vought, a longtime trusted Trump aide and veteran of his first term – when he served in the budget office in multiple roles – seized on testimony that Powell gave to the Senate Banking Committee on June 25, when he was asked by Sen. Tim Scott, R-S.C., about the Fed’s renovations. Scott told Powell that “Americans have lost confidence in the Federal Reserve since 2021.”
“During this time of hardship, the Fed has spent billions on lavish renovations to its D.C. offices. We’re talking about rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes and even a private art collection,” Scott claimed.
Powell promised the committee a detailed response in writing, before saying, “Generally, I would just say we do take seriously our responsibility as stewards of the public’s money.”
Powell then responded to each of Scott’s questions about the renovation: “There’s no [VIP] dining room. There’s no new marble. We took down the old marble, we’re putting it back up. We’ll have to use new marble, where some of the old marble broke. But there’s no special elevators. There’s just old elevators that have been there. There are no new water features. There’s no beehives, and there’s no roof terrace gardens.”
Vought, in his letter, said Powell’s testimony “raises serious questions about the project’s compliance with the National Capital Planning Act.” Just days ago, the White House appointed three new members to the National Capital Planning Committee who have direct ties to Trump and his administration.
Speaking Friday morning on CNBC, Vought further criticized Powell for building what he called “a palace” that he said would be “offensive for anyone going to the National Mall.”
But when pressed multiple times by CNBC about whether he would have posted his letter to Powell on social media if the Federal Reserve chair had expressed willingness to cut the interest rate at the July 30 meeting, Vought struggled to answer.
“The President is a builder. He’s horrified by the notion of cost overruns,” Vought said before turning his argument back to what he calls Powell’s “fiscal mismanagement of the Fed.”
Vought’s letter comes amid near-constant attacks from the president and his top aides against the central bank chief. Those attacks have also roiled markets. In April, just as Wall Street was starting to recover from a tariff-induced sell-off, Trump’s criticism of Powell sent them spiraling again.
Days later, Trump said he had “no intention” to fire Powell, and markets rose.
In May, the Supreme Court allowed Trump to fire several independent agency members but suggested that its legal reasoning would not apply to the Federal Reserve. The court noted that the Federal Reserve is a “uniquely structured, quasi-private entity” that has its own distinct historical tradition.
Powell has been asked repeatedly if he would leave the central bank if Trump asked him to or tried to fire him. “No,” was Powell’s stern one-word response in November. He has repeated the same answer since.
In early July, at a central banking conference, Powell was asked about Trump’s continued attacks. “I’m very focused on just doing my job,” he said, before adding that the only matters important to him are fulfilling the Fed’s congressionally mandated remits of full employment and price stability.
Central bank leaders in other countries and the European Union said they would be handling the pressure “exactly” as Powell has. Typically, the central banks of the European Union, U.K., Japan, Canada and Switzerland look to the Fed’s independent decisions to help guide their own.
The Federal Reserve is the world’s most important central bank. It was established to make independent monetary policy decisions and is responsible for key national functions such as distributing dollars and coins, acting as the “government’s bank,” and even processing checks. Its board members and governors typically serve across multiple presidential terms.
When the central bank makes a decision to lower, raise or keep interest rates steady, its 12-member Federal Open Market Committee votes on that decision. In theory, the Fed chair could be outvoted at any meeting if the rest of the committee disagrees with his or her views.
Interest rate decisions have wide-ranging impacts for not only American consumers and businesses but for the global economy, which is why the independence of the Fed is so important. Rate decisions could lower or raise borrowing costs for anyone who has a mortgage, car loan, credit card or personal loan.
More recently, Trump has expanded his attacks to include the committee, saying that they should be “ashamed” of current policy. “The Board just sits there and watches, so they are equally to blame. We should be paying 1% Interest, or better,” Trump said in a social media posting. Trump nominated Powell during his first term and nominated two other currently serving Fed board members as well.
“Our Fed Rate is AT LEAST 3 Points too high,” Trump said on Truth Social this week.
A large interest rate cut, like the one that Trump has repeatedly called for, would signal a financial emergency. The last time the Fed cut rates so dramatically was the early days of the Covid-19 pandemic, when the Fed slashed rates to near zero as the global economy came to a halt.
But the Fed remains on hold, thanks to Trump’s own dizzying array of tariffs. Powell said earlier this month that the Federal Reserve would have cut rates by now if Trump’s tariffs weren’t so substantial.
“In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact. In fact, we didn’t react at all; we’re simply taking some time.”
If Powell was removed or the president attempted to fire him, it could have far-ranging impacts.
“In the unlikely event that Fed Chair Powell is removed or steps down before his term ends in May 2026,” U.S. government debt yields would likely surge, raising the cost for the government to borrow money, analysts at ING said Friday. Stocks would also “likely sell off” given that removal would be “an unprecedented event for the market to get its head around.”
ING analysts also wrote that the removal of the Fed chair could “trigger a new round of severe downward volatility in the dollar, and the damage would be there to stay.” A weaker dollar would make it more expensive for U.S. companies to import products from overseas and would even make it more expensive for Americans to travel abroad.
The Federal Reserve declined to comment on Vought’s letter.