Federal Reserve’s $2.5B Office Overhaul Becomes Latest Flashpoint with White House

WASHINGTON, D.C. — The Federal Reserve’s multi-billion dollar renovation of its headquarters has emerged as the latest battleground in an escalating conflict between the White House and the central bank.

The price tag for the massive renovation of the Fed’s offices in the nation’s capital has jumped from $1.9 billion to $2.5 billion in recent years — a jump that President Trump’s administration is seizing on to question the Fed’s spending and leadership.

"The bottom line is that this is the most expensive project in D.C. history," said Kevin Hassett, director of the National Economic Council, during an interview on ABC’s This Week. "So the Fed has a lot to answer for."

Republican lawmakers echoed that frustration during recent hearings. Senate Banking Committee Chairman Tim Scott (R-S.C.) argued the project’s high-end details “send the wrong message to spend public money on luxury upgrades that feel more like they belong in the Palace of Versailles than a public institution.”

Powell Pushes Back on Claims

Fed Chairman Jerome Powell, under fire for both the spending and his monetary policy stance, defended the renovation. Powell told senators that many of the headlines about extravagant upgrades were misleading or outright wrong.

"There's no new marble," Powell said. "We took down the old marble. We're putting it back up. We'll have to use new marble where some of the old marble broke. But there's no special elevators. They're old elevators that have been there. There are no new water features. There's no beehives and there's no roof garden terraces."

The Fed says the rising cost comes from unforeseen issues like excess lead and asbestos removal, as well as the surge in construction inflation that has hit major projects nationwide.

White House Demands Review

Tensions flared further when White House budget director Russell Vought sent Powell a letter last week claiming the president is “extremely troubled” by the Fed’s management and the perceived “ostentatious” features of the renovation.

Ironically, removing some of those disputed features could violate the National Capital Planning Commission’s approved design, according to Vought — even though Trump recently placed loyalists on that same commission. The Fed maintains its buildings aren’t under the commission’s direct control.

To address the controversy, Powell has now asked the Fed’s inspector general to launch a full review of the renovation’s budget and oversight — a step first reported by Axios.

A Symbol of Bigger Tensions

Experts say the clash over marble and elevators is just the surface of deeper friction. “I think it's a sideshow,” said David Wessel of the Brookings Institution. “This seems just another way the administration is trying to make life miserable for Powell since it can't legally fire him unless it can make the case that he has mismanaged things.”

Behind the spectacle is an unresolved policy rift. Trump wants the Fed to slash rates sharply to make borrowing cheaper for a federal government now carrying a $36 trillion debt and to stimulate growth amid trade and tariff uncertainty.

"Our Fed Rate is AT LEAST 3 Points too high," Trump wrote on social media last week, slamming Powell for holding rates steady through 2025.

With Powell’s term ending in ten months, speculation is mounting that Trump will seek a new Fed leader more aligned with his calls for ultra-low rates. Former Fed governor Kevin Warsh, a Trump ally, made clear he’d favor a shakeup: “I think what we need is regime change at the Fed... and frankly, it’s about breaking some heads,” Warsh told Fox News.

But if markets lose confidence in the Fed’s independence, economists warn the fallout could ripple through borrowing costs, inflation expectations, and the broader economy.

Originally reported by Scott Horsley in NPR News.