Trump Visits Fed to Pressure Powell: "Lower the Rates"

First Sitting U.S. President to Visit Fed in 19 Years
Trump Criticizes Excessive Spending on Fed Building Renovation
"Says He Will Not Dismiss Powell Over Construction Costs"
Repeatedly Demands Rate Cut... "No Personal Feelings Involved"

On July 24 (local time), U.S. President Donald Trump made a surprise visit to the Federal Reserve (Fed) headquarters, becoming the first sitting president to do so in 19 years. This move is seen as an attempt to increase pressure on Fed Chair Jerome Powell, who has consistently rejected Trump's calls for interest rate cuts, by raising concerns about excessive spending on the building's renovation and repair costs. On this day as well, President Trump repeatedly urged Chair Powell to lower interest rates.

AP Yonhap News

At around 4 p.m. that day, President Trump visited the Fed headquarters in Washington, D.C., and toured the renovation site with Chair Powell.

Wearing white safety helmets, President Trump and Chair Powell inspected the site, after which Trump publicly criticized the soaring construction costs, stating that the Fed building's renovation had ballooned to "about $3.1 billion." Previously, the White House pointed out that the Fed had spent $2.5 billion on the project, $700 million more than the initial budget, but this time President Trump cited an even higher figure, raising the issue more forcefully.

Chair Powell shook his head and said, "I've never heard that before." President Trump then handed over documents detailing the budget, to which Chair Powell responded, "That figure includes the budget for buildings that were completed five years ago." President Trump replied, "That's why we're going to look into it," adding, "We'll see what happens. There's a long way to go."

He drew a clear line regarding the possibility of dismissing Chair Powell.

When asked by reporters whether the controversy over the Fed building's construction costs could be grounds for dismissal, President Trump replied, "I don't want to put that in this (firing) category," and added, "I don't think there's any need to dismiss him." However, he jokingly remarked, "Normally, you would fire someone for that." Unlike some aides who had mentioned the possibility of dismissal over the construction costs, President Trump dismissed the idea.

His persistent calls for an interest rate cut continued that day.

President Trump said, "What I want is just one very simple thing: a rate cut," adding, "I wish he (Chair Powell) would lower rates a bit. What else can I say?" During this exchange, Trump tapped Powell on the arm, and Powell responded with a smile. Trump then added, "It's nothing personal. I just hope the (construction) project is completed well."

He assessed that there was "no tension" in his meeting with Chair Powell, saying, "It was a good meeting."

Since returning to office, President Trump has continuously demanded interest rate cuts from Chair Powell. However, the Fed has kept the benchmark rate unchanged at 4.25?4.5% for four consecutive times this year, citing concerns about rising inflation due to tariff policies. In response, President Trump has increased pressure on Chair Powell, using harsh terms such as "the man who is always late" and "idiot." Nevertheless, it is highly likely that the Fed will keep the benchmark rate unchanged at the upcoming Federal Open Market Committee (FOMC) meeting on July 29?30.

There are growing concerns in the market that undermining the Fed's independence could lead to instability in financial markets. Dan Ivascyn, Chief Investment Officer (CIO) of PIMCO, the world's largest bond manager, warned in an interview with the Financial Times (FT) that "any attempt to weaken the central bank's independence would be very harmful to the market," and emphasized, "From the perspective of the bond market, it is important that positive signals continue to emerge indicating that Chair Powell will be able to complete his term." Some forecasts suggest that if President Trump were to dismiss Chair Powell, it could result in a sharp rise in long-term Treasury yields due to the politicization of monetary policy, increased inflation, and a decline in long-term confidence in the U.S. economy.

Meanwhile, this is the first time in 19 years that a sitting president has visited the Fed, since former President George W. Bush attended then-Chair Ben Bernanke's inauguration in 2006. Moreover, it is unprecedented for a president to visit the Fed in person and directly raise issues such as demands for rate cuts and the possibility of dismissal. Some observers interpret President Trump's visit to the Fed headquarters as a "political show" aimed at shifting the focus from the Jeffrey Epstein sex scandal, which has put him on the defensive.