"New Federal Reserve News Agency": "Over-Decoration" The real struggle is in public opinion, Trump aims to force Powell to resign or cut interest rates

The Trump administration is using a $2.5 billion headquarters renovation project by the Federal Reserve as a political weapon, launching an increasingly intense public pressure campaign against Chairman Jerome Powell. The "New Federal Reserve News Agency" analysis suggests that Trump is attempting to erode Powell's public trust to force concessions on interest rate policy, and even ultimately resign.

Recently, the White House's criticism surrounding the Federal Reserve's renovation has escalated, with senior White House advisors mocking the renovation as wasteful on social media, and White House budget director Russ Vought sending a letter to Powell raising questions. President Trump has publicly stated that he believes the likelihood of firing Powell is "very low," but immediately added, "unless he has to leave due to fraud."

In a recent article by Wall Street Journal reporter Nick Timiraos, known as the "New Federal Reserve News Agency," it is stated that the controversy surrounding the building renovation has effectively shifted the struggle from policy debate to a more publicly impactful arena of public opinion. By focusing on a specific government spending case rather than esoteric monetary policy, Trump's allies are attempting to politically undermine Powell. This move aims to shake market confidence in the Federal Reserve's independence and force Powell to make a difficult choice between defending the institution's credibility and yielding to political pressure.

In the face of pressure, Powell has stated he will defend the independence of the Federal Reserve. Timiraos' article notes that Powell has made it clear both publicly and privately that he believes protecting the Federal Reserve's ability to set interest rates free from political interference is a key goal for the remaining 10 months of his term:

Resigning or retreating without a fight would make Powell an accomplice in undermining the independence he has vowed to uphold. For Powell, this stance is not a reflection of personal ambition, but a commitment to maintaining the authority of the Federal Reserve for future chairpersons.

The Public Opinion Battlefield Beyond the Law

The Trump administration's offensive against Powell has rapidly escalated in recent days.

White House senior political advisor James Blair posted an AI-generated image depicting Powell as French Queen Marie Antoinette on social media, captioned "Let them eat basis points." White House budget director Russ Vought also sent a sharp letter to Powell, raising pointed questions about the cost of the renovation project, suggesting he may have misled Congress.

Timiraos' article points out that the real battlefield of this Trump administration action is not the courtroom, but public opinion. According to the law that created the Federal Reserve, its governors can only be removed for "cause," which is typically interpreted as misconduct or gross neglect.

Legal experts generally doubt that the government could easily obtain support in court to remove Powell based solely on cost overruns of a construction project. A recent Supreme Court order also suggests that the president's power to dismiss certain federal commissioners does not apply to the Federal Reserve Therefore, the White House's strategy seems to focus more on political sabotage. Timiraos believes that a report published earlier by a former Federal Reserve economist regarding the inflated costs of the headquarters renovation was uncovered months later by Trump's loyal supporters, who turned it into a "big club." Their goal is to force Powell to resign by humiliating him or to accumulate "evidence" for a potentially court-sanctioned removal action.

For institutions that rely on credibility to operate effectively, being forced to shift focus from monetary policy to defending their spending choices and construction management is, in itself, a weakening. Compared to the dot plot of interest rates, marble and construction costs are topics that the public can more easily understand and resonate with.

The Controversy at the Core: $2.5 Billion Renovation Project

At the center of this controversy is the Federal Reserve's renovation project of its Washington headquarters, which has been ongoing for several years. The project involves two main buildings: the Marriner S. Eccles Building, completed in 1937, and the William McChesney Martin Building, added in the 1970s. The Federal Reserve is a self-funded institution and received explicit authorization from Congress in 2000 to expand or renovate its buildings.

According to the Federal Reserve, part of the cost overruns were due to unforeseen construction conditions, such as unexpected asbestos, toxic pollutants in the soil, and higher-than-expected groundwater levels. Additionally, to meet local planning department requirements for architectural preservation, the design was modified to include additional underground space to compensate for the loss of above-ground space, all of which drove up the total project cost.

During a congressional hearing last month, Powell rebutted claims that the use of high-gloss finishes drove up costs, pointing out that these designs had already been removed from the plans. However, the White House clearly did not accept this explanation, as evidenced by budget director Russ Vought's letter and the move to place three Trump aides on the relevant planning committee, indicating that the government plans to keep the project in the public eye.

Powell's Stance: Defending the Independence of the Federal Reserve

According to Timiraos, in the face of unprecedented political pressure, Powell has made it clear in both public and private settings that defending the Federal Reserve's ability to set interest rate policy free from political interference is a key goal for him in the remaining 10 months of his term. He believes that resigning or retreating without a fight would be tantamount to colluding with actions that undermine the institution's independence, which is not only about him personally but also about preserving institutional authority for future Federal Reserve chairs.

For Powell, maintaining independence is the cornerstone of ensuring the Federal Reserve's credibility. Historically, central banks that lose their independence often struggle to maintain market trust and effectively control inflation, ultimately leading to higher long-term interest rates.

Timiraos mentions in the article that this confrontation could even evolve into an institutional stalemate. The Federal Reserve controls its own buildings, finances, and security systems. This means that even if Trump announces a dismissal, Powell could theoretically continue to work at the Federal Reserve headquarters until a court approves the removal or the Senate confirms a successor The current pressure strategy of the White House on the Federal Reserve bears some resemblance to history. President Richard Nixon pressured then-Federal Reserve Chairman Arthur Burns before the 1972 election.

At that time, the Nixon administration leaked false information to the media to force Burns to maintain low interest rates, claiming that while Burns proposed national wage and price controls, he was seeking a pay raise for himself. This strategy of achieving policy goals by attacking personal character and management issues seems to be replaying with Powell today