Federal Reserve 'Renovation Gate' Controversy: Powell's Resignation and Trump's Interest Rate Demands

The actions of the Federal Reserve have always influenced the global economy. Recently, its chairman Powell resigned due to a building renovation controversy, compounded by Trump's strong demands for interest rate policies, making the financial situation even more complex.

The incident originated from the renovation project of the Federal Reserve building. The originally planned budget of $1.5 billion eventually soared to $2.6 billion, exceeding the budget by $700 million, which sparked widespread dissatisfaction, with Trump being one of the most vocal critics. He believes that the Federal Reserve should focus on economic stability and job promotion, rather than spending huge sums on luxurious renovations. A White House letter pointed out that the project includes too many luxurious facilities and exceeds the office space standard, constituting a waste of public resources. It is worth noting that the Federal Reserve headquarters underwent major renovations from 1999 to 2003, and this new large investment inevitably faces accusations of extravagance.

Faced with criticism, Powell was under immense pressure. He explained that the cost overruns were due to numerous unexpected issues: the building's asbestos content far exceeded expectations, requiring additional funds for remediation; there were toxic pollutants in the underground soil that needed to be cleared; and the groundwater level was higher than estimated, increasing construction difficulty and costs. However, under the continued pressure from the Trump administration, these explanations failed to quell the doubts, and Powell ultimately chose to resign.

Meanwhile, Trump's dissatisfaction with the Federal Reserve's interest rate policy reached its peak, as he strongly demanded a three percentage point cut in interest rates. He believes that this move could stimulate economic growth, reduce corporate financing costs to encourage investment and production, create jobs, and alleviate the government's debt burden.

However, a significant rate cut could trigger a chain reaction in global financial markets. If the Federal Reserve were to do this, other countries might follow suit, leading to a massive increase in global money supply, which could not only trigger global inflation but also increase instability in financial markets, bringing uncertainty to the world economy.

Looking back at history, the typical term for a Federal Reserve board member is 14 years, but since 2000, 15 members have resigned early, reflecting the challenges faced by the Federal Reserve's decision-making mechanism and personnel stability under complex economic conditions and various pressures. Powell's resignation and Trump's interest rate demands have placed the Federal Reserve and the global economy at a new crossroads, with the future direction being closely watched. #币圈