- The White House’s latest criticism of Fed Chair Jerome Powell, over building renovations, marks a broader push by President Trump to exert pressure on the independent central bank. In a response to Fortune, Federal Reserve Bank of St. Louis president Alberto Musalem defended the institution’s autonomy, citing global evidence that independent central banks deliver stronger inflation and employment outcomes.
As well as penning letters to hundreds of world leaders this week, the White House also found time to write to Fed Chair Jerome Powell, criticizing his leadership.
The president’s top budget advisor, Russell Vought, revealed yesterday he wrote to the Federal Reserve boss saying the president is “extremely troubled” by the Fed’s office building renovations, claiming Powell is “grossly mismanaging” the institution.
The letter blasting the “ostentatious overhaul” (which Vought wrote is over budget to the tune of $700 million) comes as an escalation—or a change in tack—in the White House’s ongoing battle with the Federal Open Market Committee and more specifically, its leader.
Chairman Jerome Powell has grossly mismanaged the Fed.
— Russ Vought (@russvought) July 10, 2025
While continuing to run a deficit since FY23 (the first time in the Fed's history), the Fed is way over budget on the renovation of its headquarters.
Now up to $2.5 billion, roughly $700 million over its initial cost.… pic.twitter.com/lHK4cWlAvf
Despite a push from Trump 2.0 for efficiency, Vought’s questioning is, to some extent, at odds with the Federal Reserve Act, which gives authority to the Fed to maintain or change its buildings when it deems necessary.
It reads: “The Board of Governors of the Federal Reserve System shall have power to levy semiannually upon the Federal Reserve banks, in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses … Its judgment alone shall be necessary for the purpose of providing suitable and adequate quarters for the performance of its functions.
“The Board may maintain, enlarge, or remodel any building or buildings so acquired or constructed and shall have sole control of such building or buildings and space therein.”
Even before President Trump and JD Vance won the presidential election, the duo were hinting they wanted more of a say in how the federally mandated independent Fed is run—and criticism of Powell has ramped up since then.
Prior to the election, Trump called Powell “political” and said a rate cut would prove the FOMC was attempting to aid the Biden administration.
Since winning the election, Trump has continually lobbied for cuts to the extent of threatening to fire Powell—which he legally is unable to do—and in turn sent shock waves through the market.
Despite a U-turn over the firing threat, President Trump has continued to criticize Powell, including calling him “dumb” and “hardheaded,” and said he should resign.
Vance’s argument is that the decision about such a major lever of the economy should be more diplomatically decided, saying last summer: “Whether the country goes to war, what our interest rates are, these are important questions that American democracy should have important answers for, and I think all President Trump is saying is: ‘Look, it’s kind of weird that you have so many bureaucrats making so many important decisions.’”
Why is Fed independence so important?
The reasoning is clear: To achieve the Fed’s dual mandate of inflation at 2% and maximum employment, the interest rate level should be set by independent economists working for the long-term benefit of the American public, as opposed to the behest of whichever politician is in the White House.
The importance of Fed independence was reiterated yesterday by Alberto Musalem, president and CEO of the Federal Reserve Bank of St. Louis, speaking prior to the letter sent from Vought to Powell.
In response to a question from Fortune during a broadcast event with independent think tank OMFIF, Musalem explained: “If you look at empirical evidence across many countries and many years—so a lot of data—countries that have had more independent central banks have delivered better inflation and better employment outcomes for the people they serve, meaning lower and more stable inflation and higher and more stable employment.”
Musalem previously worked for the International Monetary Fund (IMF) as well as a number of private investment businesses.
He added: “I observed that empirical evidence to be true in my own career.”
Examples of political intervention into the Fed have worked out poorly in the past—take Richard Nixon’s relationship with Fed Chair Arthur Burns.
Burns has been dubbed by many as the worst leader in the Fed’s history, having presided over a period of stagflation—high inflation and low growth—in the 1970s. According to some historians, part of this resulted from his failure to stand up to the Oval Office.
“Countries with more independent central banks are able to control inflation expectations and keep them anchored better, and if they can keep inflation expectations anchored better, that means they can be more responsive to employment and activity when there are shocks to the economy,” president Musalem added. “It’s a good thing to be able to do that.”
Despite having nominated Powell for Fed chair himself, President Trump is making little secret of the fact he wants to see a more dovish person in the role. Indeed, late last month, he told reporters he was “going to put somebody that wants to cut rates.”
President Musalem maintained the need for a board that was accountable and transparent to the public, saying: “We at the Fed have instrument[al] and operational independence, but the goals of maximum employment and price stability are set by Congress, and there’s accountability to Congress.”
