Overview

• President Trump has intensified scrutiny of the Fed’s Washington headquarters overhaul, directing the Office of Management and Budget and White House appointees on the National Capital Planning Commission to probe $600 million in cost overruns as grounds for dismissal.
• Legal scholars point out that the Federal Reserve Act limits presidential removal of the Fed chair to instances of proven “cause,” and they deem a renovation dispute unlikely to satisfy that standard.
• An anonymous White House insider warns that firing Powell could provoke a “massive market reaction,” and Senate Republicans have cautioned that ousting the chair would unsettle financial markets and the broader economy.
• A recent unsigned Supreme Court ruling emphasized that presidents must cite valid reasons to remove heads of independent agencies, making any attempt to dismiss Powell unprecedented and legally fraught.
• Economists say undermining the Fed’s independence could erode its credibility, prompting investors to demand higher long-term interest rates and counteracting Trump’s push for lower borrowing costs.