The Federal Reserve's "Renovation Gate" escalates, Trump makes his first "visit" to pressure for interest rate cuts, but the alarm for firing Powell is paused, and Bessen points out other risks

The Federal Reserve's "renovation gate" crisis is brewing, with U.S. President Trump personally "visiting" to discuss the controversial high costs of the Federal Reserve headquarters renovation project with Fed Chairman Jerome Powell, repeatedly urging for interest rate cuts. However, the alarm for his dismissal of Powell has been temporarily lifted, as he hinted after the "visit" that he would abandon the idea of dismissal for now.

On July 24th, during the late trading session of U.S. stocks, Trump visited the Federal Reserve headquarters located in Washington, D.C. During this time, he showed Powell a paper document regarding the renovation costs of the Fed headquarters, stating that the renovation costs for the two Fed buildings have exceeded $3.1 billion.

Powell immediately refuted this estimate, saying, "I haven't heard anyone say that." He mentioned that Trump was including the costs of a third government building, which "was built five years ago," implying that it was not the same as the two historic buildings currently under renovation. Trump responded, "So we will take a look. We will see how it progresses; there is still a long way to go."

Trump insisted on his expectation of high renovation costs for the Federal Reserve and repeatedly asked Powell to cut interest rates. He stated that seeing a lot of very expensive work at the Fed building was terrible from the start. When a reporter asked what Powell could do to get Trump to withdraw his criticism, Trump repeatedly expressed his hope that Powell would lower interest rates.

During the inspection, a reporter asked how Trump would treat the project manager responsible if one of his construction projects went over budget. Trump jokingly replied, "Generally speaking, what would I do? I would fire them."

As Trump said this, he patted Powell on the arm, and Powell laughed. Trump then added that he "didn't want to target individuals" and "just wanted to see it completed."

No need to dismiss Powell; his term will soon expire, and I believe he will do the right thing

After the inspection, Trump insisted that there was "no tension" in his meeting with Powell, refusing to disclose what discussions they had regarding interest rates, saying, "I think our talks went smoothly."

Trump hinted that he would not dismiss Powell solely because of the renovation project overruns. He stated, "I just want to see one thing happen, very simply: interest rates must be lowered."

Trump called dismissing Powell a "big move, which I think is unnecessary." He indicated that Powell was not under pressure to resign. His term would soon expire, "I believe he will do the right thing."

Trump mentioned a successor for Powell, stating that he has a name in mind for the next Federal Reserve chairman, possibly three candidates.

Trump remarked that the situation he saw at the renovation site was very luxurious. The basement building is expensive. He hopes for interest rate cuts and also hopes for the completion of the Fed building renovation project. Interest rates must be lower than those of any other country. U.S. housing prices must be suppressed. Housing prices must fall, and interest rates must also be lowered.

Trump posted on social media that he still hopes the renovation project can be completed "as soon as possible," stating that the project "has a significant cost overrun, but the positive side is that our country is doing very well and can almost afford any expense—even the cost of this building!" After Trump's inspection, according to media reports, U.S. Treasury Secretary Becerra also mentioned that besides the Federal Reserve building renovation project, other operations of the Federal Reserve may affect the independence of its monetary policy decisions.

Becerra stated that the influence of the Federal Reserve has become too great. He believes that the Federal Reserve should return to its "core business" and hopes to see the Federal Reserve resolve its own issues internally.

"New Federal Reserve News Agency": The inspection is part of Trump's actions to smear Powell's image and push for interest rate cuts

Nick Timiraos, a journalist known as the "New Federal Reserve News Agency," analyzed last week that the controversy surrounding the Federal Reserve's renovation has essentially shifted this struggle from policy debate to a more publicly influential arena of public opinion. Trump is attempting to erode Powell's public trust to force him to make concessions on interest rate policy, or even ultimately resign.

On Thursday, Timiraos wrote again that the Federal Reserve's renovation project has become Trump's latest tool to criticize the Federal Reserve for resisting the White House's pressure for significant interest rate cuts. The article pointed out,

Trump's inspection of the Federal Reserve construction site has almost become a political farce, aimed at increasing pressure on the Federal Reserve. "This is part of his unconventional actions to smear the public image of Federal Reserve Chairman Jerome Powell and push for interest rate cuts."

"The president's rare visit to the Federal Reserve reflects that typical showmanship style of Trump's governance. For a president who has built his brand through dazzling real estate projects and reality TV shows, this inspection provides a televised opportunity for Powell—whom Trump personally selected as Federal Reserve Chairman eight years ago—to play the role of an incompetent bureaucrat, overseeing a $2.5 billion renovation project plagued by cost overruns."

The inspection can also divert attention from the Epstein case controversy

Brian Gardner, a policy strategist at Stifel in Washington, believes that Trump's focus on the Federal Reserve's renovation project has another political purpose. This challenge can resonate with Trump's supporters' anti-establishment sentiments while diverting attention from other controversies, including criticism related to handling documents related to the Epstein case.

Xinhua News Agency reported on Thursday that during his presidential campaign, Trump promised to release documents related to the Epstein case once in office. His appointed Attorney General Bondi had previously told the media that the "client list" had been sent to her desk for review. However, on the 7th of this month, the U.S. Department of Justice and the Federal Bureau of Investigation issued a joint memorandum stating that there is no such "client list" and decided not to release documents related to the Epstein case anymore.

Reports indicate that this sudden shift by the Trump administration has caused a rift within the "Make America Great Again" (MAGA) camp that supports Trump. Recent media polls show that 69% of respondents believe the Trump administration is concealing information regarding the case.

To appease dissatisfied Republican voters, the Department of Justice is simultaneously requesting the release of court documents related to the Epstein case while announcing its intention to interview key figure Ghislaine Maxwell, who is currently serving a prison sentence. However, the media continues to relentlessly pursue the connection between Trump and the Epstein case documents U.S. media reported on Wednesday that Attorney General Bondi had informed Trump that his name was indeed in the documents.

Media reports that a U.S. House committee is investigating the Fed's renovation, the Fed invites reporters to tour the construction site

Before Trump's "visit," the U.S. House may have already taken action on the controversial Federal Reserve renovation project. The Fed, in a rare move, launched a public relations campaign, inviting a group of media to tour the project site.

On Thursday morning Eastern Time, some media reported that a House committee was investigating the Federal Reserve building renovation project. Subsequently, some reports indicated that on Thursday, Fed staff led media reporters on a tour of the renovation site at the Fed headquarters, showcasing the areas under construction on this media open day.

Fed staff introduced that the renovation project is carried out daily by about 700 to 800 workers in two shifts. During the tour, they showcased some factors contributing to the high costs of the renovation, such as safety elements of the building, including blast-resistant windows, shear walls, and progressive collapse measures, which are implemented to help the project meet the Department of Homeland Security standards.

Reporters also visited the roof of the Marriner S. Eccles building at the Fed headquarters. Previously, Republicans questioned part of the renovation based on a 2021 National Capital Planning Commission (NCPC) document that mentioned the building had a "roof garden terrace" and an employee lounge area. Fed staff stated that the plan for seating on the roof had been canceled, and compared to the previous NCPC document, this and the cancellation of the plan for a drinking fountain in the adjacent building are the only two changes currently.

First visit by a U.S. president to the Fed headquarters since 2006, threatening the independence of the central bank

Before the Fed proactively invited the media to tour the renovation site, the White House "previewed" that Trump would make a rare personal visit to the Federal Reserve headquarters located in Washington, D.C. The last time a U.S. president visited the Fed headquarters was in 2006, when then-President George W. Bush attended Ben Bernanke's swearing-in ceremony as Fed Chair.

The presidential schedule released by the White House indicated that Trump would visit the Fed at 4 PM Eastern Time on Thursday, with the visit lasting about an hour.

An article from Wall Street Journal pointed out that U.S. presidents typically do not visit the Fed in an official capacity, reflecting the long-standing independent relationship between the central bank and the White House. Now, Trump's "on-site inspection" of the Fed headquarters has once again raised market concerns about the independence of the central bank.

Before his personal "visit," Trump had been criticizing Powell for not lowering interest rates throughout this year, insisting that significant rate cuts should be made, and had hinted multiple times at considering firing Powell.

Although Trump later stated that he would not fire Powell before the end of his term as Fed Chair, senior officials in the Trump administration and some Republicans have been "coordinating" with Trump to pressure Powell to cut rates. U.S. Secretary of Commerce Ross explicitly stated in a media interview on Wednesday that Powell "must go" and should "either resign or be replaced."

Trump's "assistants" take turns attacking Powell over the Fed headquarters renovation

Recently, the Trump administration has found a new leverage in its game with the Federal Reserve, using a $2.5 billion renovation project of the Fed headquarters as a political weapon, intensifying attacks on Powell.

Three weeks ago, Bill Pulte, the director of the Federal Housing Finance Agency (FHFA) appointed by Trump, called for Congress to investigate Powell, claiming that his testimony in the Senate regarding the Fed headquarters renovation plan was "deceptive," stating that his political bias and false testimony in the Senate "constitute grounds for removal."

Two weeks ago, Russ Vought, the director of the Office of Management and Budget (OMB), wrote to Powell, accusing him of "serious mismanagement," implying that he misled Congress about the "extravagant" renovation project at the Fed headquarters, and demanded more information related to the project.

Last week, James Blair, a senior political advisor at the White House, posted an AI-generated image on social media depicting Powell as Marie Antoinette, the French queen, with the caption "Let them eat basis points."

Pulte, Vought, and Blair have recently all requested to personally inspect the Fed's renovation project, and all three accompanied Trump on a visit to the Fed headquarters this Thursday.

Recently, Vought stated that the $2.5 billion renovation project is shocking, and the cost overruns have angered Trump. On Monday, media reported that Blair revealed the Trump administration plans to inspect the $2.5 billion renovation project at the Fed this week, and Senate Banking Committee Chairman Tim Scott is also discussing participation in this inspection.

At that time, Blair stated that Powell had informed the government that the renovation "design plan has changed," "we just want to know if this is true." The Federal Reserve responded that the changes are minor and do not require further review.

On Tuesday, Trump also pointed out issues with Powell regarding the renovation project, stating, "This guy is building a severely over-budget building; what does he need this building for?"

Although Trump has currently abandoned the threat of continuing to fire Powell, just before the inspection of the renovation project this Thursday, Pulte posted on social media that Powell "must resign."

Republican lawmakers repeatedly pressuring Powell

Republicans in the U.S. Congress have also been repeatedly pressuring Powell.

Florida Republican Representative Anna Paulina Luna wrote on social media last week that she believes Trump will soon fire Powell, but this uproar quickly subsided, and the firing did not occur.

On Monday, Luna sent a letter to the U.S. Department of Justice, stating that Federal Reserve Chairman Powell committed perjury twice, and his claim that cost increases were to simplify construction and avoid further delays was false Criminal charges were brought against him. On the same day, the White House press secretary stated that Trump has no plans to fire Powell; however, Powell needs to lower interest rates.

This Wednesday, the U.S. "third-in-command," House Speaker Johnson stated that he is disappointed with Powell. Like Trump, Johnson also hopes to lower interest rates, pointing out that current consumers are facing difficulties in purchasing homes and other large expenditures. "Even a slight reduction in interest rates could greatly benefit the currently somewhat lagging economic sectors."

Also on Wednesday, Senate Banking Committee Chairman and South Carolina Republican Senator Tim Scott wrote to Powell, requesting more information about the management details of the Federal Reserve's headquarters renovation project.

The letter indicated that the Federal Reserve's staff briefed the Banking Committee staff last week. The Federal Reserve has published more information on its official website's "Frequently Asked Questions." The letter stated: "Some of the content mentioned in your (Powell's) testimony and FAQs shows significant discrepancies with the only publicly available plan describing the Federal Reserve building renovation project."