The budget chief of the Trump administration intensifies criticism of Powell, vowing to investigate the Federal Reserve's renovation projects

Russell Vought, the Director of the Office of Management and Budget (OMB), stated on Friday that he will push for an investigation into the renovation project of the Federal Reserve building, which he referred to as "a palace," pointing out that the project's costs are severely out of control and there is reason to investigate whether Jerome Powell has engaged in misleading behavior regarding the $2.5 billion renovation project:

When you come to the National Mall, you will see this palace under construction, costing up to $2.5 billion, severely over budget. We need to understand the actual spending and the extent of the overruns. I believe this illustrates fundamental management failures at the Federal Reserve under Powell's leadership.

In a letter released on Thursday, Vought accused Powell of "gross negligence" and misleading Congress regarding the costs and scope of the renovation project at the Federal Reserve headquarters in Washington, D.C. Vought stated that the project has significantly exceeded its budget, while Powell testified to Congress in June that some "high-end" designs, such as a VIP restaurant and rooftop garden, were not included, yet these elements appeared in the design specifications.

Vought said:

Powell's problem is that he is always a step behind. It is time to lower interest rates; the issues are already clear. But beyond that, the bigger problem is that the Federal Reserve's financial management is very chaotic, as evidenced by this "Versailles" palace currently under construction.

On Friday, Vought did not directly respond to whether the renovation allegations are related to Powell's stance on interest rates. He stated, "This is undoubtedly related to the Federal Reserve's financial management, and interest rates are just one aspect of it. We have begun a careful investigation into this matter over the past few days. Our newly appointed planning committee members are raising very sharp questions."

The Federal Reserve's renovation project is overseen by the National Capital Planning Commission. Recently, Trump appointed three new commissioners who have direct ties to the White House: the new chair Will Scharf, who is also the White House Secretary, White House Deputy Chief of Staff James Blair, and budget office policy analyst Stuart Levenbach.

It should be noted that while the commission is responsible for the design and approval of the project, there is still controversy over whether funding control falls under the jurisdiction of the budget office.

Trump has repeatedly criticized Federal Reserve Chairman Powell over interest rate cuts. Trump has argued that the Federal Reserve's refusal to cut rates has increased the interest burden on the U.S. government's debt. Powell has insisted that political factors will not influence the Federal Reserve's interest rate decisions. Powell and other Federal Reserve officials have kept the federal funds rate unchanged since December of last year. The market generally expects that the Federal Reserve will not cut rates at the July meeting but may take action in September.

Regardless, Powell's term as Federal Reserve Chairman will expire in May 2026, although he can continue to serve as a Federal Reserve Governor until 2028. Powell was initially nominated as Federal Reserve Chairman by Trump in November 2017 and confirmed by the U.S. Senate in February of the following year. His reappointment was approved by former President Biden in 2022.

The Federal Reserve Act grants the Federal Reserve the power to "maintain, expand, or renovate" its own buildings and explicitly states that the Federal Reserve has "exclusive control" over its buildings and internal spaces As a quasi-governmental institution, the Federal Reserve does not directly receive taxpayer funding. Although salary standards are set by the U.S. Congress, compensation comes from its own funding mechanisms, primarily derived from interest earned on its investments.

Typically, the Federal Reserve remits surplus profits to the U.S. Treasury. However, in recent years, due to rising U.S. Treasury yields, the Federal Reserve has fallen into a loss situation as the interest it needs to pay exceeds the returns on its long-term bonds.

Analysis indicates that the Trump administration's budget chief has intensified criticism of Powell, which may signal a further escalation of the conflict between President Trump and Federal Reserve Chairman Powell. These accusations have become a new round of pressure from Trump on Powell. Trump has repeatedly accused the Federal Reserve of not lowering interest rates as "playing politics" and has publicly called for Powell's resignation.

Although the U.S. Supreme Court recently ruled that the President does not have the authority to arbitrarily dismiss Federal Reserve officials, the allegations regarding the renovation project may provide Trump with a "legitimate reason" to attempt to remove Powell