Powell defends .5 billion Fed renovation in a point-by-point response to the Trump administration



Federal Reserve Chair Jerome Powell responded by letter Thursday to a senior Trump administration official who accused the head of the central bank of mismanaging an “ostentatious overhaul” of its Washington, DC, headquarters.

The decision, which was widely expected, left the Federal Reserve’s key lending rate between 4.25% and 4.5%, where it has stood since December. But in an unusual dissent, two members of the board voted against the plan, saying they preferred to cut, which is a sign that support for lower rates may be broadening. The vote came as new economic data continued to fuel debate over what effects Trump’s tariffs will have on the world’s largest economy.

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Powell said in his response late Thursday that the renovation and its financing have always had careful oversight from the central bank’s board and its own watchdog. He added that the Fed is “not generally subject to the direction” of the National Capital Planning Commission, a body that oversees construction projects for the federal government. Powell said the Fed voluntarily opted to collaborate with the NCPC.

The Fed typically lowers interest rates when the economy is struggling and raises them if the pace of price rises starts increasing too quickly. Policymakers at the Fed have long indicated that they expected to lower borrowing costs at some point this year, following in the footsteps of other central banks, including in the UK, which have cut interest rates. But they have held off far longer than once anticipated, worried about how tariffs and other new policies, including tax cuts, will affect the economy. Inflation, the pace of price increases, also remains above the Fed’s 2% target, ticking up to 2.7% in June.