Powell writes to the White House defending the Federal Reserve's $2.5 billion renovation project

According to Zhitong Finance APP, Federal Reserve Chairman Jerome Powell defended the Federal Reserve's $2.5 billion renovation project in a letter to Russell Vought, the Director of the Office of Management and Budget at the White House, on Thursday. In the letter, Powell stated, "We are acutely aware of our responsibility to manage public resources properly, as we fulfill the duties assigned to us by Congress on behalf of the American people." Powell's letter mainly reiterated information about the construction project found on the Federal Reserve's website. This letter was a response to Vought's letter sent on July 10. In that letter, Vought described the renovation as a "showy, large-scale overhaul" and criticized the project's costs, while requesting Powell to provide detailed information about the renovation within seven business days. The controversy centers around the renovation of two historic buildings at the Federal Reserve's Washington headquarters. Former President Trump, Vought, and other Trump allies have seized the opportunity presented by the rising costs of the project and Powell's recent testimony in Congress regarding the renovation to intensify scrutiny on Powell in recent weeks. The criticism of the construction project coincides with ongoing pressure from Trump administration officials for the Federal Reserve to cut interest rates. Federal Reserve policymakers have kept interest rates unchanged so far this year, awaiting more information on how Trump's tariffs and other economic policies will affect inflation and the labor market. The Federal Reserve's pause on interest rate cuts has angered Trump, leading him to frequently berate Federal Reserve Chairman Powell. In the past week, Trump has also criticized the project, even suggesting that it constitutes a fireable offense "to some extent." On Wednesday, Trump stated that he had no intention of firing Powell but reserved the possibility of doing so when discussing the renovation project. Trump said, "I don't rule out any possibility, but I think the odds of that happening are extremely low unless he has to leave due to fraudulent behavior." Federal Reserve Governor Christopher Waller attributed part of the cost overruns to inflation after speaking in New York on Thursday. He stated, "In all the construction projects I've heard of, this situation is quite common—I mean, I'm not defending it—but it's not unusual. And our inflation rate is much higher than it was when bids were made in 2017. This is clearly a factor." Waller has been considered one of the potential candidates to succeed Powell as Federal Reserve Chairman, as Powell's term will expire in May next year