President Donald Trump’s ongoing campaign to push the Federal Reserve toward cutting interest rates escalated this week, as one of his top aides launched a new line of attack—this time targeting the renovation of the Fed’s Washington headquarters.
Office of Management and Budget Director Russell Vought, a trusted Trump ally, sent a sharply worded letter to Fed Chair Jerome Powell on Thursday, accusing him of mismanaging the institution’s finances while prioritizing what he called a “lavish” overhaul of its D.C. offices.
“The President is extremely troubled by your mismanagement of the Federal Reserve System,” Vought wrote in a letter posted to X. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C. headquarters.”
While Trump told reporters Friday he has no plans to fire Powell, the criticism marks another flashpoint in a long-running feud. Trump has repeatedly attacked Powell in the past, calling him “very stupid” and suggesting, “I think he hates me.”
Clashing Over the Fed’s Renovations
Vought’s letter seized on Fed Chair Powell’s testimony before the Senate Banking Committee last month, when Sen. Tim Scott (R-S.C.) raised concerns about costly renovations. Scott accused the Fed of spending billions on rooftop terraces, marble finishes, VIP dining rooms, and a private art collection—even as Americans struggled with inflation and high interest rates.
Powell pushed back, saying the claims were exaggerated or flat-out false.
“There’s no VIP dining room. No new marble—we took down the old marble and are putting it back up. No special elevators, no beehives, and no roof gardens,” Powell said. “We do take seriously our responsibility as stewards of the public’s money.”
Despite Powell’s rebuttal, Vought argued the testimony raised “serious questions” about whether the project complies with the National Capital Planning Act. The Trump administration recently appointed three new members to the committee overseeing such projects.
Speaking on CNBC Friday, Vought called the renovation “a palace” and said it was “offensive for anyone visiting the National Mall.”
When asked if his criticisms would have been made public had Powell committed to cutting rates at the July 30 meeting, Vought avoided the question, pivoting instead to the Fed’s “fiscal mismanagement.”
Market Jitters and Legal Hurdles
The pressure campaign comes at a time of heightened scrutiny over the Fed’s independence. In April, Trump’s attacks on Powell rattled Wall Street just as markets were beginning to recover from a tariff-related slump. More recently, Trump has publicly chastised the Fed’s Open Market Committee, saying they “should be ashamed” for not cutting rates more aggressively.
“We should be paying 1% interest, or better,” Trump wrote on Truth Social this week. “Our Fed Rate is AT LEAST 3 Points too high.”
Trump nominated Powell during his first term, along with two other current board members. While the president cannot unilaterally fire the Fed chair, a recent Supreme Court decision allowing firings of independent agency heads has sparked speculation. Still, the Court noted that the Fed, as a “quasi-private entity,” remains uniquely structured and legally protected.
When asked if he’d resign if Trump demanded it, Powell has been firm: “No,” he said in November—and has stood by that answer since.
International Confidence and Economic Risks
At a recent global banking summit, central bank leaders from the EU, U.K., Japan, and Canada all praised Powell’s measured response to political pressure, saying they would handle similar circumstances “exactly” as he has.
The Fed, considered the most influential central bank in the world, controls interest rates, currency circulation, and plays a central role in global financial stability. Any disruption to its leadership could have profound effects.
Analysts at ING warned Friday that removing Powell could lead to surging government borrowing costs, a major sell-off in the stock market, and long-term damage to the value of the U.S. dollar. A weaker dollar would make imports and international travel more expensive for Americans.
Despite the pressure, Powell said earlier this month the Fed has refrained from cutting rates largely due to Trump’s own economic policies—particularly tariffs, which have pushed inflation forecasts higher.
“We didn’t overreact. In fact, we didn’t react at all. We’re simply taking some time,” Powell said.
The Federal Reserve declined to comment on Vought’s letter.
