Powell Requests Inspector General Review of $2.5B Project

Federal Reserve Chair Jerome Powell has formally asked the central bank’s independent inspector general to review the escalating cost of renovating its Washington headquarters. The move comes as the Trump administration intensifies its criticism of the project, now estimated at $2.5 billion — roughly $700 million over budget.

The renovation, approved by the Fed’s Board in 2017, covers two historic buildings: the Marriner S. Eccles building and a neighboring property on Constitution Avenue. The cost overrun and reported design features have triggered accusations of excessive spending from Trump officials, who say the upgrades may violate local building regulations. Powell’s request follows a letter from budget advisor Russ Vought, who called the overhaul “ostentatious” and potentially out of compliance with planning rules.

Political Pressure Grows Over Fed Independence

The Fed’s renovation costs have become a focal point for broader criticism from the Trump administration, which has repeatedly clashed with Powell over interest rate policy. Trump has urged rate cuts to reduce government borrowing costs and boost markets, while Powell and his colleagues have remained cautious, citing uncertainty around tariff impacts and inflation.

Although the president cannot legally remove the Fed chair over policy disagreements, Vought’s letter may be a signal that Trump allies are trying to build a case for dismissal “for cause.” The Fed’s governing law only permits removal under conditions such as misconduct or neglect of duty — none of which have been substantiated. Powell’s current term runs through May 2026, and he has stated his intent to serve it in full.

Disputed Claims and Cost Justifications

Allegations of luxury amenities — including VIP dining rooms, private elevators, and rooftop terraces — have been publicly refuted by Powell. During a recent Senate hearing, the Fed chair said the renovation included no such features. The Fed’s website FAQs further explain that what was described as a “garden terrace” is in fact a ground-level lawn atop a parking structure, intended for stormwater management and building efficiency.

The central bank also cited inflation-driven increases in construction costs, unexpected asbestos removal, and compliance with Washington’s height restrictions as reasons for the budget growth. Because the Fed operates independently of congressional appropriations and is funded through interest on its bond portfolio and fees from banks, the renovation does not draw directly from taxpayer funds.

Fed Remains Under Political Fire

Trump’s criticism of Powell has intensified alongside his broader trade and monetary agenda. On Monday, the president again called Powell “terrible,” repeating previous attacks on the chair’s refusal to cut rates more aggressively. Powell has defended the Fed’s position, saying more evidence is needed on how Trump’s tariff policies will affect inflation and economic growth.

Despite political pressure, analysts remain confident that Powell will complete his term. According to Krishna Guha of Evercore ISI, “Absent revelations of related misconduct by the Fed chair — for which there is zero evidence to date — we are 100% confident Powell will not resign.”