Fed chair hopeful challenges Powell on spending

Kevin Hassett, chairman of the White House National Economic Council, said in an interview with ABC News on the 13th that the $2.5 billion construction cost of a Federal Reserve building project is excessive. He argued that the president has the authority to dismiss Fed Chair Jerome Powell if there is "just cause." Reuters and other media outlets interpreted this as Hassett joining former President Donald Trump's push to oust Powell for not lowering interest rates. Hassett is widely considered a leading candidate to replace Powell.

“This is the most expensive project in Washington’s history,” Hassett said, claiming the cost exceeded the original estimate by $700 billion. “The Fed has a lot to answer for,” he added. The Fed has been renovating two buildings in Washington since 2021. When asked whether the building costs could justify Powell’s removal, Hassett replied that it depends on how the Fed responds to a cost inquiry from White House Budget Director Russell Vought.

On the 10th, Vought sent a letter to Powell accusing the Fed of carrying out a lavish renovation project, which includes a rooftop garden, artificial waterfalls, a VIP dining area, and marble finishes. He requested a response within seven business days. Some observers have interpreted this as a move by Trump to create grounds for dismissing Powell before the next Federal Open Market Committee (FOMC) meeting on July 29.

Axios and other U.S. political outlets reported that Trump is using the construction cost controversy to remove Powell, whose term ends in May next year, due to the Fed’s refusal to cut interest rates. Trump has repeatedly attacked Powell, calling him “Mr. Too Late” and a “loser.” On July 2, Trump shared an article on social media accusing Powell of lying to Congress about the Fed’s construction plans and demanded his immediate resignation.

Trump also said recently that the shortlist for the next Fed chair has been narrowed to two or three names, further signaling his intent to sideline Powell. Hassett and former Fed Governor Kevin Warsh are seen as top contenders. Hassett, a key economic adviser during Trump’s first term, played a central role in the U.S.-China trade war and currently leads the Trump administration’s tariff policies as NEC chairman. His stance on monetary policy aligns with Trump’s preference for low interest rates.


안규영 기자 kyu0@donga.com