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Why Trump is accusing Fed Chair Powell of lying—and what it means for interest rates

White House advisors allege Powell misled US Congress about building expenses as they search for legal grounds to unseat him.

July 12, 2025 / 14:08 IST
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Why Trump is accusing Fed Chair Powell of lying
Why Trump is accusing Fed Chair Powell of lying

The Trump administration in the US has escalated its pressure campaign against Federal Reserve Chair Jerome Powell, alleging he either misled Congress or mismanaged the central bank’s $2.5 billion headquarters renovation—an accusation that could provide a legal opening for his removal amid rising tensions over interest rate policy, the Wall Street Journal reported.

Building costs trigger fresh scrutiny

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The administration’s criticism centers on ballooning expenses for the renovation of three Fed office buildings overlooking the National Mall in Washington. A letter sent Thursday by Trump’s budget director Russell Vought suggested Powell either made false statements to lawmakers or failed to comply with key capital-area building regulations.

The letter was followed by a Friday briefing, where Vought and newly appointed White House advisers on the National Capital Planning Commission said Powell’s testimony regarding cost overruns and luxury features in the redesign would face “very, very tough questions.” One of those advisers, Deputy Chief of Staff James Blair, told reporters he was “keen to pry into” compliance issues related to the Fed’s construction filings.