White House Increases Criticism of Federal Reserve Chair Jerome Powell

The Trump administration has increased its criticism of Federal Reserve Chair Jerome Powell.

Just two weeks after President Donald Trump sent a letter to Powell requesting lower interest rates, Russell Vought, Director of the Office of Management and Budget (OMB), accused Powell of not complying with government oversight regulations and providing inaccurate information to Congress regarding a planned $2.5 billion renovation of the Federal Reserve’s headquarters.

"The President is extremely troubled by your management of the Federal Reserve System," Vought wrote in a letter posted to social media. "Instead of attempting to address the Fed’s fiscal situation, you have proceeded with a significant overhaul of your Washington D.C. headquarters."

For several months, President Trump has publicly criticized Powell, whom he appointed during his first term. Recently, Trump has used the nickname "Too Late" for Powell, referencing the timing of the Fed’s response to the 2022 inflation crisis and the decision not to lower interest rates as inflation decreased. Earlier this month, Trump suggested Powell should resign in a social media post.

While some central banks, such as the European Central Bank and the Bank of Mexico, have reduced their benchmark lending rates this year, the Federal Reserve has not. Officials have stated they want to assess the impact of recent policy changes before considering further rate cuts.

Powell has not responded directly to the criticism, stating that the Federal Reserve is focused on managing inflation and maintaining the health of the labor market.

CNN has contacted the Federal Reserve for comment.

Possible Grounds for Dismissal

Some analysts suggest that the administration’s recent focus on the costs of the Federal Reserve’s headquarters renovation may be an attempt to establish grounds for dismissing Powell. Ed Mills, a policy analyst at Raymond James, noted that Supreme Court rulings make it unlikely the president could dismiss Powell without cause. Mills stated that creating a negative environment might encourage Powell to resign.

Mills also warned that removing Powell could affect financial markets, especially if it appears that the Federal Reserve’s independence is compromised. He suggested that a perceived loss of independence could lead to higher, not lower, interest rates.

The recent criticism may be intended to undermine Powell and influence public opinion.

Other administration officials have also criticized Powell. In the past two weeks, Peter Navarro, senior counselor for trade and manufacturing, wrote an opinion piece critical of Powell, and Bill Pulte, head of the Federal Housing Finance Agency, called for a congressional investigation into Powell.

Alan Blinder, a former Federal Reserve vice chair, commented that there appears to be pressure on Powell to resign, but he does not believe Powell will or should do so.

A White House official stated that the president’s comments reflect his frustrations with the Federal Reserve chair and that the OMB’s investigation is not intended to justify Powell’s dismissal.

"I am not aware of a broader scheme to use that as a way to push Powell out," the official said.

Renovation Controversy

Critics have raised concerns about the planned renovation of the Federal Reserve’s office buildings and Powell’s recent congressional testimony about the project.

The estimated cost for the renovations increased to $2.5 billion this year, up from earlier estimates of $1.9 billion. A 2023 Federal Reserve budget document attributed the increase to higher raw material costs, increased labor costs, and changes in the construction schedule.

During Senate testimony in June, Powell addressed criticism of the project, stating, "there’s no VIP dining room, there’s no new marble… there are no special elevators, just old elevators that have been there."

Vought accused Powell of providing inaccurate testimony and stated that the renovation did not comply with federal oversight regulations. The Federal Reserve operates with its own budget and set of rules, separate from the federal government.

Tariffs and Interest Rates

President Trump has expressed a preference for a Federal Reserve chair who would lower interest rates. The Federal Reserve has not reduced rates since December.

Trump and some of his supporters have suggested that the Federal Reserve’s decision to maintain rates is politically motivated. Powell has indicated that the administration’s tariff policy, and its potential impact on inflation, has influenced the Federal Reserve’s decisions.

When asked whether the Federal Reserve would have reduced rates if not for significant policy changes by the Trump administration, Powell responded, "I do think that’s right."

Powell also noted that most Federal Reserve officials expect to reduce rates later this year.

President Trump has indicated he may soon announce his choice to succeed Powell, whose term ends in May 2026.

Alan Blinder stated that even without dismissing Powell, appointing a new chair who pledges to lower interest rates could affect market confidence in the Federal Reserve. Blinder suggested that such actions could raise inflation expectations and lead to higher market interest rates.

"I think it could be a way for the president of the United States to push monetary policy," Blinder said.

This article has been updated with additional context and developments.