Washington: US President Donald Trump has revived his long-standing effort to remove Federal Reserve Chair Jerome Powell, this time, citing a costly building renovation as justification.

Why does Trump want to remove Jerome Powell?

Trump has been at odds with Powell for years, mainly over interest rate decisions. He believes Powell should have slashed rates to reduce borrowing costs, which could have helped the government’s finances and economy. However, Powell resisted, warning that cutting rates prematurely could fuel inflation and lead to long-term harm.

Now, Trump is arguing that Powell’s handling of a $2.5 billion renovation project on two Federal Reserve buildings in Washington is grounds for dismissal.

“When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful,” Trump said.

He added, “I think it sort of is” when asked if this could justify removing Powell.

What is the renovation project about?

The renovation concerns the Fed’s headquarters, the Marriner S. Eccles building, and a neighbouring property it acquired in 2018. The Fed says the Eccles building, dating back to the 1930s, urgently needs upgrades to plumbing, electrical systems, HVAC, and to remove asbestos and lead.

The Fed says this is the first “comprehensive renovation,” despite routine maintenance over the years.

Due to rising construction costs, labour shortages during the pandemic, and the need to build underground (thanks to building height limits in Washington), the project ballooned to $2.5 billion, about $600 million more than originally planned. In response, the Fed cancelled plans for renovating a third building in 2024.

The Fed insists the overhaul will pay off “over time” by allowing them to consolidate 3,000 Washington-based staff and reduce rental expenses.

What are the accusations?

Russ Vought, Trump's top budget adviser, wrote to Powell accusing him of planning an “ostentatious overhaul” featuring “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.”

The Mercatus Center, a think tank at George Mason University, echoed these concerns in a March 2025 paper by Andrew Levin, a Dartmouth economist and former Fed staffer.

What does Powell say?

Powell denied the claims during a Senate Banking Committee hearing. “There’s no VIP dining room,”

he said. “There’s no new marble. ... There are no special elevators. There are no new water features. ... And there’s no roof terrace gardens.”

The Fed clarified that many of those features had been part of early 2021 plans but were later removed. The Fed also says it is voluntarily complying with the National Capital Planning Commission (NCPC), not obligated to follow its direction.

Can Trump legally fire Powell?

The US Supreme Court has made it clear that Trump cannot fire Powell simply for policy disagreements. However, presidents can dismiss a Fed chair “for cause”, such as misconduct or dereliction of duty.

Trump is now arguing that Powell misrepresented renovation plans in congressional testimony and violated approval procedures, thereby meeting that standard.

White House officials claim the Fed’s decision to scale back the project without returning to the NCPC for re-approval is a breach of protocol. James Blair, Trump’s deputy chief of staff and a member of the planning commission, posted on X that Powell’s testimony “leads me to conclude the project is not in alignment with plans submitted to & approved by the National Capital Planning Commission in 2021.”

Blair said he plans to tour the site, examine the changes made since the 2021 approval, and may draft a letter to Fed officials. Meanwhile, Powell has asked the Fed’s independent inspector general to review the renovation costs.

Although the Fed insists it is accountable to Congress, not the White House, the administration appears to be building a case for Powell’s removal.

This controversy also reopens concerns about political interference in the central bank. As Powell and his board are responsible for managing inflation and employment, their independence from political influence is seen as vital for economic stability.

Any attempt to remove Powell could risk financial market instability, higher borrowing costs, and diminished trust in the Federal Reserve’s autonomy.

AP inputs