Trump Cites Renovation Issues as Possible Grounds for Powell Dismissal

President Donald Trump suggested Tuesday that cost overruns in the Federal Reserve headquarters renovation could justify removing Chair Jerome Powell from office. This marks the latest escalation in the administration's pressure campaign against the central bank's leadership.

When questioned whether renovation issues constituted valid grounds for dismissing the Fed chair, Trump responded, "I would think so, in one way it is." The remarks came as Powell faces a weekend deadline to respond to a formal inquiry from the White House Office of Management and Budget (OMB) regarding budget overruns and design changes in the $2.5 billion headquarters modernization project.

Trump further questioned Powell's congressional testimony about the building project. Last week, OMB demanded explanations for the renovation's escalating costs, prompting the Fed to refer the matter to its inspector general for investigation. White House senior adviser Kevin Hassett previously hinted that Trump might leverage these issues to oust Powell.

The administration reportedly seeks to install a Fed chair more amenable to presidential interest-rate cutting directives. Though Powell lacks unilateral control over monetary policy decisions, Trump personally views him as the primary obstacle to significant rate reductions.

Market analysts now scrutinize whether the renovation controversy represents genuine dismissal grounds or merely political leverage. This weekend's response from Powell serves as a critical indicator of potential White House action. The Fed has already initiated an internal investigation into the renovation details through its inspector general.

Investors remain divided on whether the administration will follow through with dismissal threats or deploy the renovation issue solely as pressure tactic against the central bank's interest-rate decisions.

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