WASHINGTON: US President Donald Trump said on Thursday (Jul 24) he would not fire Federal Reserve Chair Jerome Powell, though he told reporters following a visit to the US central bank’s headquarters that he still wanted lower interest rates.
The rare presidential visit to the Fed happened less than a week before the central bank’s 19 policymakers gather for a two-day rate-setting meeting, where they are widely expected to leave the US central bank’s benchmark interest rate in the 4.25 per cent to 4.50 per cent range.
The president has repeatedly demanded that Fed Chair Jerome Powell slash US interest rates and has frequently raised the possibility of firing him, though Trump said on Thursday he would not make that move.
“To do so is a big move and I just don’t think it’s necessary,” Trump, who called the Fed chief a “numbskull” earlier this week, told reporters after visiting the site of a US$2.5 billion renovation of two buildings at the Fed’s headquarters in Washington.
The White House has criticised the renovation as overly costly and ostentatious, escalating tensions between the administration and the independent overseer of the nation’s monetary policy.
The president made clear that a reduction in borrowing costs was still his main priority.
“I’d love him to lower interest rates,” Trump said as Powell stood by, his face expressionless.
Powell typically spends the Thursday afternoon before a rate-setting meeting doing back-to-back calls with Fed bank presidents as part of his preparations for the session.
The two men, wearing construction helmets, walked side by side through the site. The encounter became heated as Trump told reporters the project was now estimated to cost US$3.1 billion.
“I am not aware of that,” Powell said, shaking his head. Trump handed him a piece of paper, which Powell examined. “You just added in a third building,” the Fed chief said, saying the Martin Building had been completed five years ago.
Elevated by Trump to the top Fed job in 2018 and then reappointed by former President Joe Biden four years later, Powell last met with Trump in March when the Republican president summoned him to the White House to press him to lower rates.
The visit took place as Trump battles to deflect attention from a political crisis over his administration’s refusal to release files related to convicted sex offender Jeffrey Epstein, reversing a campaign promise. Epstein died in 2019.
White House officials have ramped up Trump’s pressure campaign on Powell in recent weeks, accusing the Fed of mismanaging the US$2.5 billion renovation of two historic buildings in Washington and suggesting poor oversight and potential fraud.
White House budget director Russell Vought has pegged the cost overrun at “US$700 million and counting”, and Treasury Secretary Scott Bessent called for an extensive review of the Fed’s non-monetary policy operations, citing operating losses at the central bank as a reason to question its spending on the renovation.
Those losses stem from the mechanics of managing the Fed’s policy rate to fight inflation, which include paying banks to park cash at the central bank. The Fed reported a comprehensive net loss of US$114.6 billion in 2023 and US$77.5 billion in 2024, a reversal from years of big profits it turned over to the Treasury when interest rates – and inflation – were low.
The Fed, in letters to Vought and lawmakers backed up by documents posted on its website, says the project – the first full rehab of its two buildings in Washington since they were built nearly a century ago – ran into unexpected challenges including toxic materials abatement and higher-than-estimated materials and labor costs.
Speaking outside of the construction site, Trump said there was “no tension” at his meeting with Powell and that they had a productive conversation about rates. He added that while the Fed’s construction project was complex and its costs were “out of control,” he wanted it to be completed.
