What’s Happening?
1. Allegations and a $2.5B Fed HQ Renovation
The Federal Reserve’s $2.5 billion renovation project in Washington, DC—dubbed the "Palace of Versailles" by critics—has drawn significant controversy.
Internal and congressional scrutiny suggests Powell may have misled lawmakers about its cost and design .
The White House’s Office of Management and Budget has launched a probe into the overruns, with Trump-appointed commissioners now reviewing the plan .
2. Trump’s Escalating Attacks
Former President Trump is turning up the pressure:
He's repeatedly demanded Powell’s resignation, labeling him “Too Late,” “terrible,” and even suggesting the Fed Chair “should resign immediately” .
Trump also blames Powell for keeping interest rates high and is pushing for dramatic 300-basis-point cuts to ease budget pressures .
3. Tension Over Fed Independence
Legal experts highlight that, under current law and a 1930s Supreme Court precedent, Trump cannot fire Powell without clear evidence of misconduct .
The Fed continues to uphold its independence, resisting political pressure and citing the need to manage inflation and employment .
4. Powell’s Position
Powell remains firm on serving his term (run through May 2026 or possibly until 2028 as Board member) and shows no sign of stepping down .
He continues to steer the Fed toward its dual mandate, affirming that monetary decisions won’t be influenced by external politics .
Why It Matters
Monetary Policy & Markets: Pushes for sharp rate cuts could influence inflation, debt servicing costs, and market dynamics.
Central Bank Credibility: Political pressure risks eroding Federal Reserve independence—a cornerstone of market confidence.
Economic Stability: Reliability in central bank decision-making helps anchor expectations for corporations, investors, and consumers globally.
Bottom Line
Despite mounting political pressure and calls for resignation, Jerome Powell appears likely to remain in place.
