Read the complet CBS News article, Trump Official Criticizes Fed Chief Jerome Powell for "Ostentatious" Office Renovations, as Trump Takes Aim Over Interest Rates.

According to the article, a top Trump administration official recently accused Federal Reserve Chair Jerome Powell of leading an "ostentatious" office renovation project that may be "violating the law", a new broadside against the central bank chief as President Trump tangles with him over interest rates.

"The President is extremely troubled by your management of the Federal Reserve System," Office of Management and Budget Chair Russell Vought wrote in a letter Thursday.

The letter came after months of criticism from Mr. Trump over the Fed's decision not to slash interest rates. Economists say lowering rates may accelerate economic growth, but it also runs the risk of causing inflation to spike. That has led the Fed's interest rate-setting committee — which Powell chairs — to keep rates steady so far this year after cutting rates slightly last year.

Mr. Trump has called on Powell to resign from his post, and last month, the president called Powell a "numbskull" over his interest rate decisions and said "maybe" he'll try to fire Powell — though federal law states the Fed chair can only be fired "for cause," which typically refers to firings due to specific misconduct or performance issues. In the past, Mr. Trump had said he does not plan on trying to fire Powell, whose term as Fed chair ends next year.

Trump Administration Targets Fed Chair Over Office Renovation

Vought's letter took aim at Powell and the central bank over its years-long office renovation project in Washington, D.C. The letter said plans for the project "called for rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more." Vought also asked whether the Fed has made changes to its plans without seeking approval from a government commission that oversees D.C.-area federal building projects.

In testimony to the Senate last month, Powell called some descriptions of the renovation project "misleading and inaccurate." He told lawmakers there isn't any new marble aside from what's necessary to replace broken old marble, and said there are no "special elevators," new water features or rooftop gardens.

"All of the sort of inflammatory things that the media carried are either not in the current plan or just inaccurate," Powell said.

Vought's letter argued that comment to the Senate "appears to reveal that the project is out of compliance with the approved plan," suggesting the Fed may have run afoul of a law requiring D.C.-area projects be approved by the National Capital Planning Commission. In a post on X, the Office of Management and Budget alleged Powell "slipped up and revealed he might...be violating the law."

The Fed's renovation plans were reviewed by the commission several years ago.

The Fed typically operates with a much higher degree of independence than most other government institutions. Federal law gives the Fed the power to make decisions about acquiring and remodeling buildings in Washington to serve as its office spaces.

The Fed has previously acknowledged in budget reports that the price tag for its office renovations had jumped due to "significant increases in raw materials costs."

Last week, Bill Pulte, the Trump-nominated head of the Federal Housing Finance Agency, also accused Powell of "deceptive" testimony to the Senate about the office project.

Asked about the allegation in a recent Cabinet meeting, Mr. Trump said: "Then he should resign immediately. We should get somebody in it that's going to lower interest rates."

Discussion Questions

  1. Describe the Federal Reserve System.

    The Federal Reserve System includes three key entities: (1) the Board of Governors (a.k.a. the Federal Reserve Board); (2) 12 Federal Reserve banks; and (3) the Federal Open Market Committee. The Federal Reserve Board, with Jerome Powell as its current chairperson, is the governing body of the Federal Reserve System, responsible for implementing monetary policy. Monetary policy is a set of tools used by a nation’s central bank to control the overall money supply and promote economic growth. It involves strategies such as adjusting interest rates, the “bone of contention” President Trump has with Chairperson Powell. President Trump would like for interest rates to be lowered to promote lending and borrowing (and thereby, ideally, economic growth), while Chairperson Powell and the Federal Reserve Board have thus far elected to keep interest rates steady (and thereby, ideally, control inflation).

  2. Does President Trump have the legal right to fire Fed Chairperson Powell? Why or why not?

    The question of whether a U.S. president can fire the chairperson of the Federal Reserve is a fascinating and complex legal issue, balancing executive (i.e., presidential) authority with the need for an independent central bank. Generally, the president has the power to remove executive branch officials at will. This principle, established in cases like Myers v. United States (1926) and reaffirmed in Collins v. Yellen (2021), allows the president to ensure executive branch loyalty. However, this power is not absolute, and it is subject to congressional limitations.

    Congress has created exceptions for independent agencies like the Federal Reserve. To protect their independence, these agencies often have “for cause” removal provisions. Landmark cases like Humphrey’s Executor v. United States (1935) and Seila Law LLC v. Consumer Financial Protection Bureau (2020) have upheld Congress’s ability to limit presidential removal power for these agencies. Specifically, these cases clarify that for independent agencies, the president can only remove officials for reasons like “inefficiency, neglect of duty, or malfeasance in office.”

    In Humphrey’s Executor v. United States, President Franklin D. Roosevelt dismissed William E. Humphrey, a commissioner of the Federal Trade Commission (FTC), due to Humphrey’s opposition to Roosevelt’s New Deal policies. The FTC Act specified that commissioners could only be removed for inefficiency, neglect of duty, or malfeasance in office. The U.S. Supreme Court unanimously held that Roosevelt’s removal of Humphrey was unjustified. The Court ruled that the president does not have unlimited removal power over officials in independent agencies like the FTC, which perform quasi-legislative and quasi-judicial functions. This case distinguished itself from Myers v. United States (1926), which had upheld the president’s removal power over purely executive officers.

    Humphrey’s Executor v. United States reinforced the separation of governmental powers, ensuring that independent agencies remain free from direct presidential control.

  3. In your reasoned opinion, who should set the level of interest rates in the United States—the Federal Reserve Board, or the U.S. president? Explain your response.

    This is an opinion question, so student responses may vary. In your author’s opinion, monetary policy (e.g., the appropriate level of interest rates) should be separated from politics as much as possible, and it is best left in the hands of the Federal Reserve, an independent governmental agency. The members of the Federal Reserve Board, including Chairperson Powell, are well-trained experts in monetary policy, and that, along with their commitment to be as non-political as possible in their evaluation of the current status of the U.S. economy and what policy best addresses economic problems, presents a strong argument in terms of Federal Reserve’s authority over monetary policy, including the appropriate level of interest rates.