Washington — President Trump and Federal Reserve Chair Jerome Powell had a disagreement almost immediately as the two men set foot in the Fed’s headquarters in Washington on Thursday to survey an extensive renovation project on two of the reserve’s buildings.
Last week, Mr. Trump indicated that Powell’s handling of the massive project and its cost overruns could be grounds for firing. But on Thursday, Mr. Trump said he doesn’t think firing Powell is necessary.
Chip Somodevilla / Getty Images 
Mr. Trump and Powell appeared side by side on the construction site Thursday — both in hard hats — with the president insisting costs have increased further, reaching $3.1 billion. Powell shook his head and said he hadn’t heard that figure from anyone at the Fed. Mr. Trump handed a document to Powell, who put on his glasses to review it.
“You just added in a third building is what that is — that’s a third building,” Powell said of the Federal Reserve’s Martin building.
“Well, I know but it’s a building that’s being built,” Mr. Trump responded.
“No — it was built five years ago. We finished Martin five years ago,” Powell told the president.
“It’s part of the overall work,” Mr. Trump responded.
“It’s not new,” Powell reiterated.
Mr. Trump asked Powell if he expects any further cost overruns. Powell said he does not. The project is expected to be completed in 2027.
After a tour of the construction site, Mr. Trump called the project “a very luxurious situation.” But asked if the project’s cost and overruns are a fireable offense for Powell, Mr. Trump said, “Look, I would love to see it completed. I don’t want to put that in this category. It’s a very complex thing that could have been made simple.”
Mr. Trump said he feels “good” about his relationship with Powell and they had a “productive” conversation Thursday, but reiterated that interest rates need to come down.
“I just want to see one thing happen, very simple — interest rates have to come down,” he said.
A reporter asked Mr. Trump why he doesn’t fire Powell now, instead of replacing him when his term is up in 2026.
“To do that is a big move, I just don’t think it’s necessary,” the president responded. “And I believe he’s going to do the right thing.”
Mr. Trump has criticized Powell for months because the Fed has kept the short-term interest rate the Fed controls at 4.3% this year — after cutting it three times last year. Powell says the Fed wants to see how the economy responds to Mr. Trump’s sweeping tariffs, which Powell says could push up inflation.
Powell’s caution has infuriated the president, who has demanded the Fed cut borrowing costs to spur the economy and reduce the interest rates the federal government pays on its debt.
The Fed has been renovating its Washington headquarters and a neighboring building. With some of the construction occurring underground and as building materials have soared in price after inflation spiked in 2021 and 2022, the estimated cost has ballooned to about $2.5 billion from $1.9 billion.
When asked last week if the costly rebuilding could be grounds to fire Powell, Mr. Trump said, “I think it is.”
“When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful,” the president said.
Firing Powell would threaten the Fed’s independence, which has long been supported by most economists and Wall Street investors, and would almost certainly rattle financial markets.
Mr. Trump has at various times referred to his handpicked Fed chair as a “numbskull,” a “Trump Hater” and a “stubborn mule.”
The president asked a group of House Republicans in an Oval Office meeting last week if he should fire Powell, sources told CBS News. Mr. Trump told reporters a day later it’s “highly unlikely” he would, though he confirmed he spoke to lawmakers about “the concept of firing him” and “almost all of them said I should.”
Renovations have been underway for years
Plans for the Fed’s renovation were first approved by the Federal Reserve Board of Governors in 2017. The project then went through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump’s appointees derided as a “glass box.”
The National Planning Commission, another local body, pushed the Fed to add marble to a rooftop addition.
Fed staff also said tariffs and inflationary increases in building material costs also drove up costs. Mr. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. Steel prices are up about 60% since the plans were approved in June, while construction materials costs overall are up about 50%, according to government data.
Fed staff also pointed to the complication of historic renovations — both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper.
contributed to this report.
