Donald Trump could fire Jerome Powell over Fed building renovation. But will he?

President Donald Trump has long wanted to oust Federal Reserve Chair Jerome Powell.

And he may have finally found his excuse.

Trump has claimed Powell bungled the Federal Reserve’s building renovation project, which cost an estimated $2.5 billion.

Trump has for months called on Powell, who operates independently of the government, to try to slash interest rates.

The US Supreme Court for once has ruled against Trump, saying the president fire Powell over a disagreement in philosophy.

However, there’s a catch.

The Federal Reserve chief can be sacked ‘for cause’, a legally ambigious term which some have interpreted as misconduct.

Trump has made a meal of that.

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He has claimed that he could use Powell’s handling of the renovation to get rid of him.

But will he really do it?

Let’s take a closer look

A fireable offence

Trump has waffled back and forth on whether he could get rid of Powell.

Last week, he said he thinks mishandling the building reservation was a “fireable offence.”

However, he also added that he would likely not remove Powell before his term of office ends.

Trump is right to play coy.

The optics of a US president firing the Fed chief who refuses to tow the line could send markets spiralling and investors fleeing.

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Powell has for months tried to block rump’s efforts to gain total control over the executive branch.

Powell and his board have the dual mandate of maximising employment and keeping prices stable, a task that can require them to make politically unpopular moves such as raising interest rates to hold inflation in check.

The general theory is that keeping the Fed free from the influence of the White House — other than for nominations of Fed officials — allows it to fulfill its mission based on what the economy needs, instead of what a politician wants.

An attempt to remove Powell from his job before his term ends would undercut the Fed’s long-standing independence from day-to-day politics and could lead to higher inflation, higher interest rates and a weaker economy.

The Fed renovation

The Fed has said the Marriner S Eccles building, its headquarters, was in bad need of an ugrade.

It claimed that its electrical, plumbing and HVAC systems, among others date back to the 1930s when the building first came up.

It said the renovation will also remove asbestos, lead and other hazardous elements and update the building with modern electrical and communications systems.

The H-shaped building, named after a former Fed chair in the 1930s and ‘40s, is located near some of Washington’s highest-profile monuments and has references to classical architecture and marble in the facades and stonework.

The central bank is also renovating a building next door that it acquired in 2018.

The Fed says there has been periodic maintenance to the structures but adds this is the first “comprehensive renovation.”

The renovation costs have ballooned over the years.

Trump administration officials have criticized the Fed over the project’s expense, which has reached $2.5 billion, about $600 million more than was originally budgeted.

Like a beleaguered homeowner facing spiralling costs for a remodelling project, the Fed cites many reasons for the greater expense. Construction costs, including for materials and labour, rose sharply during the inflation spike in 2021 and 2022.

More asbestos needed to be removed than expected. Washington’s local restrictions on building heights forced it to build underground, which is pricier.

In 2024, the Fed’s board cancelled its planned renovations of a third building because of rising costs.

The Fed says the renovations will reduce costs “over time” because it will be able to consolidate its roughly 3,000 Washington-based employees into fewer buildings and will no longer need to rent as much extra space as it does now.

White House budget director calls renovations ‘ostentatious’

Russ Vought, the administration’s top budget adviser, wrote Powell a letter that said Trump is “extremely troubled” about the Fed’s “ostentatious overhaul” of its facilities.

The Fed’s renovation plans call for “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more,” Vought said in last week’s letter.

Powell hits back

Powell has hit back at the claims made in a paper issued by the Mercatus Center, a think tank at George Mason University, in March 2025.

The paper was written by Andrew Levin, an economist at Dartmouth College and former Fed staffer.

“There’s no VIP dining room,” Powell said last month during a Senate Banking Committee hearing. “There’s no new marble. … There are no special elevators. There are no new water features. … And there’s no roof terrace gardens.”

Some of those elements were removed from initial building plans submitted in 2021, the Fed says.

White House also takes issue with the Fed reducing its renovation costs

The Fed’s changes to its building plans have opened it up to another line of attack: White House officials suggest the Fed violated the terms of the approval it received from a local planning commission by changing its plans.

In its September 2021 approval of the project, the National Capital Planning Commission said it “Commends” the Fed for “fully engaging partner federal agencies.” But because the Fed changed its plans, the administration is indicating it needed to go back to the commission for a separate approval.

Essentially, White House officials are saying Powell is being reckless with taxpayer money because of the cost of the renovation, but they are also accusing him of acting unethically by scaling back the project to save money.

James Blair, the White House deputy chief of staff whom Trump named to the commission, said in a post on X that Powell’s June congressional 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 intends to review materials from the Fed on how the approved 2021 renovation plans have changed and circulate a letter among his colleagues on the commission that would go to Fed officials.

The Fed has asked for an independent review of the project

The central bank says, in a series of frequently asked questions on its website, that it is “not subject to the direction” of the commission and has only complied with its directives voluntarily.

Instead, the Fed said it is accountable to the Senate and the House of Representatives and is overseen by an independent inspector general, not the White House. Powell has asked the inspector general to review the costs of the renovation project.