Overview

• The Office of Management and Budget has sent Powell a formal inquiry into cost overruns on the Fed’s $2.5 billion Washington headquarters renovation, signaling possible grounds for his dismissal.
• Powell responded by asking the Fed’s inspector general to investigate the project’s budget and scope changes, intensifying the standoff with the administration.
• President Trump has suggested the renovation overruns could justify firing Powell and has discussed Treasury Secretary Scott Bessent as a potential successor.
• Long-term Treasury yields topped 5 percent as investors shifted into assets like gold and high-quality equities to guard against a loss of central bank independence.
• Economists warn that politicizing the Fed could stoke inflation expectations, steepen yield curves, weaken the dollar and raise borrowing costs across the economy.