Federal Reserve Chairman Jerome Powell, in a letter on Thursday, rebutted criticism leveled at the central bank by a top White House official regarding the $2.5 billion renovation project. "We take seriously our responsibility to be good stewards of public resources as we fulfill the duties assigned by Congress on behalf of the American people," Powell wrote in the letter addressed to Russ Vought, director of the White House Office of Management and Budget.

Powell's letter, which largely repeats information available on the Fed's new "Frequently Asked Questions" page about the construction project, was in response to correspondence from Vought on July 10. In the letter, Vought called the renovations a "striking overhaul" and criticized the project's cost, while asking Powell to provide details about the renovations within seven business days.

At issue is the renovation of two historic buildings at the Fed's Washington headquarters. President Donald Trump, Vought, and several other Republicans have seized on the project's escalating costs and Powell's recent testimony before Congress about the renovations to intensify scrutiny of Powell in recent weeks.

Trump, when asked Wednesday if he was ruling out Powell's dismissal, said, "I'm not ruling anything out, but I think it's highly unlikely—unless he has to go because of fraud. I mean, there could be fraud involved" in the building renovations. The president's housing finance chief, Bill Pulte, has alleged, without providing details, that Powell's testimony about the renovations was "fraudulent."

Powell said the information in his Thursday letter "supports and further elaborates on my testimony" at a congressional hearing on June 25. The criticism of the construction coincides with continued calls from Trump and administration officials for the Fed to lower interest rates.

Fed policymakers have held interest rates steady throughout this year, awaiting more information on how Trump's policies on tariffs and other economic issues will affect inflation and the labor market. This holding down of interest rates has fueled Trump's anger toward Powell, with the president frequently insulting the Fed chairman.

After a speech in New York on Thursday, Fed Governor Christopher Waller blamed the cost overruns in part on inflation. "Every construction project I've ever heard of, this is a common thing—I mean, I'm not defending it—but it's not unusual," he said. "And our inflation is much higher than anyone bargained for in 2017. So, that's definitely a factor." (alg)

Source: Bloomberg