True or False, Will Federal Reserve Chairman Powell Be Fired?
[Currently, there is no definitive news indicating that Powell is about to be fired]
Key Events
The renovation budget for the Federal Reserve headquarters increased from $1.9 billion to $2.5 billion, and the overspending controversy has evolved into a political game, with the Trump administration leveraging this to pressure Federal Reserve Chairman Powell to resign, attempting to push for interest rate cuts.
Latest Developments
July 13, 2025: The Federal Reserve's official website added a 'Frequently Asked Questions' page, denying the existence of luxurious facilities such as VIP restaurants, elevators, and new water features, emphasizing that the renovation project is compliant and that cost overruns stem from design adjustments and unforeseen factors.
On the same day: Trump publicly calls for Powell's resignation, and White House economic advisors state that if it is confirmed that Powell misled Congress, Trump has the authority to fire him.
July 14: Deutsche Bank warns that the risk of Powell being dismissed may be underestimated, potentially triggering a sell-off of the dollar and government bonds.
Event Context
2021: The Federal Reserve headquarters renovation plan was approved by the National Capital Planning Commission, aimed at consolidating operations and preserving historic buildings.
2023: The project budget increased to $1.9 billion, and the annual budget requires approval from the Federal Reserve Board.
April 2025: The Washington Post exposed that renovation costs exceeded the budget by 30% to $2.5 billion, raising public concern.
June 25, 2025: Powell acknowledged the cost overruns during a Congressional hearing but refuted claims of 'luxurious renovations', stating that some reports are misleading.
July 10, 2025: White House Office of Management and Budget Director Vought wrote to Powell, questioning the compliance of the renovation project and requesting a response to 11 questions within 7 days.
July 11, 2025: The Federal Reserve's official website published an explanation of the renovation project, with the chair of the boards of Fannie Mae and Freddie Mac, Pulte, stating that Powell 'considering resignation' is the 'right decision'.
July 13, 2025: Trump again publicly pressures Powell, and the Federal Reserve's official website provides a detailed response to the reasons for the cost overruns and design disputes.
However, according to U.S. law, the Federal Reserve enjoys a high degree of independence, and the President typically does not possess the statutory authority to unilaterally dismiss the Federal Reserve Chairman. Powell's term is set to end in May 2026, and he has previously stated that Trump does not have the legal authority to remove him from office and that he will serve until his term ends.
