Can Trump fire Jerome Powell over Fed renovations? Here’s what the law says

Can Trump fire Jerome Powell over Fed renovations?

US President Donald Trump said Wednesday it was “highly unlikely” he would fire Federal Reserve Chair Jerome H. Powell “unless he has to leave for fraud.” The comment marks Trump’s latest escalation in his long-running feud with Powell, which now centres on a costly renovation of the Fed’s headquarters — a project Trump and his allies are portraying as a possible reason to oust him, the New York Times reported.

Fed renovations become Trump’s new target

The renovation project, which began in 2021 and involves two historic buildings from the 1930s, is projected to cost $2.5 to $2.7 billion — about $700 million over budget. Trump has suggested the overspending may involve fraud or mismanagement and used the controversy to revive discussions about removing Powell. He questioned how “a renovation” could cost so much, adding that Powell “is not doing a good job” and should “lower interest rates.”

Legal experts see little merit in firing attempt

Despite Trump’s claims, firing a Fed chair is legally complex. The Federal Reserve Act allows removal only “for cause,” typically interpreted as gross misconduct. Legal scholars like Columbia’s Lev Menand argue there is no substantive case against Powell. If fired, Powell could demand due process and challenge the decision in court, likely leading to a Supreme Court battle.

Critics say interest rate pressure is the real motive

The Fed has not lowered interest rates as Trump has demanded, keeping the benchmark rate at 4.25% to 4.5%. While Trump insists the renovation is the issue, many former officials and policy experts argue the attacks are a thin cover for his desire to replace Powell with someone more willing to cut rates. Jeremy Kress, a former Fed regulator, called the controversy “manufactured faux outrage.”

Fed pushes back, Powell seeks independent review

The Fed has denied Trump’s claims about extravagant spending, saying it has scaled back some controversial features and denied plans for VIP facilities. Powell also asked the Fed’s inspector general to review the renovation, likely in an attempt to demonstrate transparency. His defenders now include even critics like Senator Elizabeth Warren, who accused Trump of trying to “bully Powell.”

Legal precedent unclear, but court may lean Trump’s way

Though the Supreme Court has affirmed the Fed’s special status as a “quasi-private entity,” some experts worry about the current court’s deference to presidential power. “In normal times, I would say Powell wins 10 times out of 10,” Menand said. “But these aren’t normal times.” The outcome may depend more on political dynamics than legal merit.