The latest spit between the Trump administration and the Federal Reserve sounds more like a reality TV show at home.
But the missions are much higher: monetary policy in the most important central bank in the world and its independence from political pressure.
The argument comes when President Donald Trump continues to demand that the chairman Jerome Powell reduce interest rates. But Powell and most of the other known political decision-makers have kept a waiting-and-lake approach and said Trump’s tariffs could later present inflation this year.
Now the White House Powell, the Fed, a self -financed agency, as well as renovation work at the central bank headquarters in Washington, DC, abused.
In A Letter sent to the Fed Chief On Thursday, Office of Management and Household Director Russell Vought quoted the project’s cost overruns and asked questions about compliance with the National Capital Planning Act, which requires a commission for OK renovation plans.
Powell’s most recent statements that there are no plans for a VIP dining room, new marble, special elevators, new water features or terrace garden on the roof, changes loudly, in which almost a dozen questions about the project were approved.
“Although minor deviations from approved plans can be inevitable, their testimony seems to show that the project is not complied with with the approved plan in relation to important design elements,” wrote Vought.
In Interview about CNBC On Friday he demanded an investigation by the project and said it was time for the Fed to reduce interest rates. When asked whether the renovation is connected to Powell’s attitude to tariffs, Vought replied: “This must certainly do this with the Fed’s tax mismanagement, of which (interest rates) is one aspect of it.”
On Sunday, Kevin Hassett, director of the National Economic Council, continued to increase the Ante, which points out that Powell’s task could be at stake.
When Asked by ABC News If the renovation could be used as the reason for the dismissal of Powell, Hassett said: “I think whether the president decides to push this street or not depends on the answers that we ask about the questions that Russ is sent to the Fed.”
For his part, Trump previously denied that he would fire Powell, but said that he should “Return immediately”, “ If allegations that he has misled the legislators about the renovation work. In the meantime, Powell said that Trump cannot relieve him, and the Supreme Court decided this year that Fed officials have greater protection against termination.
A seat on the board of directors will open early next year, with which the president can name a potential replacement for Powell. But financial markets are Undervaluation of the risk The fact that it could be suppressed, said George Saravelos, German Global Head of the FX strategy, in a note.
The Fed reacts to attacks by the White House
CNBC reported that the Fed updated Frequently asked questions website On Friday with details that apparently refuted the claims of the Trump administration.
The Fed said the renovation would remove asbestos and lead contamination and replace antiquated electrical, sanitary, HLK and fire safety systems. Important structural work will also provide buildings for code for accessibility, security and security standards.
It attributed costs to changes that result from consultations with review agencies. actual costs of materials, equipment and work; Unforeseen conditions such as more asbestos than expected, toxic contamination in the soil and a higher than expected hydrogen.
The FAQs also dealt with details such as marble, the VIP dining room, the new elevator, the water and the garden terrace.
Before the current project, the Marriner S. Eccles of the FED has not been revised so before.
“While regular maintenance and work were carried out to occupy the building (including a project at the end of the nineties), there has been no extensive renovation since its construction period almost 100 years ago,” said the FED.
But even the installation of a new FED leader who is more aligned with Trump will not guarantee that the tariffs will decrease.
Powell’s term as chairman of the Fed Governor Council is in May He can continue to act as chairman of the Federal Open Market CommitteeWhat determines his own tour and the rates that Trump has reduced.
Whoever is the next Fed chair, a Trump loyalist or not, he or she still has to work with the rest of the consensus-driven FOMC, where it rarely has a few dissent from a political decision, said Ed Yardeni, President of Yardeni Research in a note last week.
If a loyalist takes over and compared to the rest of the FOMC is too big outlier in monetary policy, the chair could be handed over.
“That would seriously weaken the power of the Fed chair and concerns about the internal conflict with the Fed,” warned Yardeni.
