Bloomberg reported on July 9 that Trump said at Tuesday's cabinet meeting that if Fed Chair Powell indeed misled Congress on the headquarters renovation project, "he should resign immediately." He also stated that a new chair who supports rate cuts should replace Powell.

Trump called Powell "terrible" during the meeting and accused him on social media of "complaining about non-existent inflation like a child," again urging immediate rate cuts. He wrote, "Cut rates, Powell, now is the time!"

Policy Divergence Turns into Personnel Conflict

The policy differences between Trump and Powell have lasted for months. This year, the Federal Reserve has repeatedly kept interest rates unchanged, which has caused Trump's dissatisfaction. Trump believes that current inflation has clearly eased and the Fed should quickly cut rates to stimulate the economy. However, Powell pointed out in his testimony before Congress last month that although inflation has dropped significantly, there are still uncertainties in future price trends due to the Trump administration's tariff policies, and thus the Fed should not act recklessly.

Trump had already stated in June that he would not allow Powell to be reappointed after his term ends, and said he already has three to four potential candidates, prioritizing those who support rate cuts.

"Renovation Incident" Becomes a New Tool for Pressure

The trigger for this "resignation" statement was Powell's testimony before Congress regarding the Fed headquarters renovation project. The head of the Federal Housing Finance Agency, Bill Poole, previously accused Powell of "misleading Congress" and called for Congress to investigate. Although no concrete evidence was provided, Trump later shared and supported this accusation on social media platforms.

Media reports previously indicated that the cost of the Fed's renovation project has risen significantly, even including facilities such as a "VIP restaurant," "private elevator," and "roof garden." In response, Powell denied these claims in his congressional testimony on June 25, stating, "No new marble, no new elevator, and no water features or roof garden." He emphasized that the Fed "takes its responsibility for managing public resources seriously," and on July 3, he wrote to the Senate Banking Committee expressing willingness to further communicate on this issue.

Currently, the Fed has scheduled briefings with relevant congressional teams to provide detailed explanations about the renovation project. Powell himself has not responded to Trump's resignation remarks.

White House Officials Apply Pressure, the July Rate Meeting Becomes a Focus

Trump is not the only one applying pressure. Peter Navarro, a former White House trade advisor, stated this week that if Powell refuses to cut rates at the Federal Open Market Committee meeting on July 29-30, other board members should balance his influence, "don't let Powell lead you by the nose anymore."

This open pressure on the Fed's interest rate policy breaks the previous convention of the executive branch avoiding intervention in the central bank's independence. It is widely believed that Trump and his allies are trying to use the "renovation incident" to spark a public relations battle, ultimately achieving their goal of policy pressure.

The current federal funds rate is maintained at 4.25%-4.5%. Powell previously stated that if there were not significant uncertainties about future price trends, he would have already started cutting rates. (International Financial News)

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