Jonathan Ernst/REUTERS
- The Federal Reserve defended its $2.5 billion renovation amid political pressure.The renovation costs rose from $1.9 billion in 2017 due to material and labor costs.President Donald Trump's criticism of the project came amid speculation that he would fire Jerome Powell.
The Trump administration is criticizing the Federal Reserve's renovation project amid a feud with the independent institution over interest rates.
Federal Reserve Chair Jerome Powell defended the bank's $2.5 billion headquarters renovation budget in a letter Thursday, in response to accusations from a top Trump administration official who alleged mismanagement and potential legal violations.
"While periodic work has been done to keep these buildings occupiable, neither building has seen a comprehensive renovation since they were first constructed," Powell wrote of the Federal Reserve's Washington, DC headquarters built in the 1930s.
"The Board has made a small number of design changes to scale back or eliminate certain elements and has added no new elements," Powell added. "These changes were intended to simplify construction and reduce the likelihood of further delays and cost increases."
The cost of the major renovation project became a talking point for the Trump administration when the original $1.9 billion price tag in 2017 ballooned to $2.5 billion by 2023.
A 2023 Fed budget document attributed the cost to "significant increases in raw materials… higher labor costs, and changes in construction schedule expectations which lengthen use of leased space."
The renovation design, which includes an update to the historic Marriner S. Eccles Building, has seen a range of cost cutting changes in comparison to the original plan approved by the National Capital Planning Commission.
According to Powell's congressional testimony in June, "roof terrace gardens," "water features," and "new marble" have been scrapped to reduce costs, but updates like asbestos removal and overhauling outdated electrical and fire safety systems are essential for safety and compliance.
On July 10, Russell Vought, who served as director of the Office of Management and Budget under former President Donald Trump, posted a sharply worded letter on social media.
The letter accuses Powell of overseeing an "ostentatious overhaul" of the Fed's buildings and of breaking oversight laws. The letter also questions whether the renovation includes a VIP elevator and marble accessories, luxury features which Powell said in his response are not part of the plan.
"The President is extremely troubled by your management of the Federal Reserve System," Vought wrote, adding that Powell had seven business days to respond.
The president himself also criticised the renovation project early this week.
"When you spend $2.5 billion on, really, a renovation, I think it's really disgraceful," Trump told reporters during a press appearance.
Trump added that Powell's actions were "sort of" grounds for dismissal but later said he was "highly unlikely" to fire Powell, unless it was for "fraud."
Earlier that day, reports surfaced that Trump was considering firing Powell, which caused a swing in the stock market.
Powell, whose term is not over until May 2026 and cannot be removed without cause, has been at odds with Trump over monetary policy and has not lowered interest rates. While the president wishes to see lower borrowing costs, the Federal Reserve is concerned about bringing inflation down to the target of 2%.
