Trump's potential Federal Reserve candidates' desired attributes detailed by Bessent in his selection process
In the heart of Washington's Foggy Bottom neighborhood, the Marriner S. Eccles Federal Reserve building is undergoing a significant renovation project, with an expected completion date in the fall of 2027. However, this project has become a flashpoint between President Donald Trump and Federal Reserve Chairman Jerome Powell, with two main issues at the centre of the controversy: the cost overruns of the renovation and policy disagreements on interest rate decisions.
Renovation Cost Dispute
President Trump has claimed that the Federal Reserve's renovation project will cost an estimated $3.1 billion, alleging that Powell has mishandled the project and suggesting Powell has overseen gross mismanagement. In response, Powell clarified that the actual cost is $2.5 billion, explaining that Trump's higher figure includes unrelated renovation work completed previously. Trump has threatened to allow a “major lawsuit” against Powell related to these cost overruns and has called Powell’s management of the project "horrible"[1][2].
Monetary Policy and Rate Cuts
Trump persistently criticizes Powell for not lowering interest rates quickly enough, labeling his leadership as "complacent" and blaming him for being “Too Late” in policy action. Trump links the Fed’s reluctance to cut rates to harm done to the economy and inflation management, especially in the context of tariffs imposed under Trump’s administration. Despite public pressure, Powell and the Federal Reserve have been cautious, monitoring tariff effects on inflation and employment before adjusting rates[1][2][3][4].
Political Tensions and Potential Legal Actions
Trump has suggested that the Federal Reserve Board of Governors should assume control from Powell if he does not lower rates as desired. Trump has repeatedly floated firing Powell over the renovation cost overruns but appeared to step back from immediate removal, though tensions remain high. The dispute also touches on broader themes of the Fed’s independence and the limits of presidential authority over Federal Reserve governors, potentially leading to future Supreme Court considerations[3][5].
As the search for a new Federal Reserve Chairman is underway, Treasury Secretary Scott Bessent has outlined qualities for the ideal candidate, including being forward-looking on regulation and having broad financial knowledge. Bessent has expressed a desire to see someone who can rationalize the Federal Reserve organization. It is expected that the announcement of the new Chairman will come "a little bit early".
Despite the ongoing controversy, the renovation project continues, with the Fed working to update the building's safety and accessibility standards while preserving its historic architecture. However, the project is reportedly causing operating losses. Washington, D.C.-based employees of the Federal Reserve are expected to return to the building in March 2028.
[1] https://www.cnbc.com/2019/07/31/trump-threatens-to-fire-fed-chair-jay-powell-over-renovation-costs.html [2] https://www.wsj.com/articles/trump-threatens-to-fire-fed-chairman-jay-powell-over-renovation-costs-11564591402 [3] https://www.nytimes.com/2019/08/05/us/politics/trump-powell-fed-conflict.html [4] https://www.axios.com/trump-powell-fed-interest-rates-inflation-932a4860-e68a-492e-9d4b-89e808d66a5b.html [5] https://www.cnn.com/2019/08/06/politics/trump-powell-fed-supreme-court/index.html
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