The meeting reflected the differences between the two regarding the expensive renovation project and the economic policies implemented by the Fed.

The controversy began last week, when Trump suggested that Powell's handling of the renovation project, which has exceeded initial budgets, could justify his dismissal. However, the US president softened his stance during his visit, assuring that he did not see the need to fire Powell. Trump and Powell toured the construction site wearing hard hats, and the president insisted that the costs of the Federal Reserve renovation project had risen further, reaching $3.1 billion. Powell, for his part, denied the figure and clarified that the total cost did not include the construction of a third building as the president claimed. "They just added a third building, that's what it is," Trump retorted. Powell corrected himself, explaining that the Martin Building was completed five years ago.

Criticism of monetary policy

The renovation project began in 2017 and has been the subject of debate over rising costs. Initially budgeted at $1.9 billion, cost overruns have mounted due to inflation and tariffs imposed by Trump in 2018, which increased the cost of steel and other materials. The plans have also been modified by the aesthetic demands of the Commission of Fine Arts, which pushed for the inclusion of more marble in the structure.

Trump, who has consistently criticized the Fed's monetary policy, reiterated his position on the need to lower interest rates to stimulate the economy. "Interest rates need to come down," he said, while expressing that his relationship with Powell remains positive despite the tensions. Powell, for his part, has maintained a cautious stance, defending the Fed's decisions in an uncertain economic environment, especially given the tariffs imposed by Trump that could increase inflation.

Fire Powell?

Despite Trump's continued criticism of Powell, firing the Federal Reserve chairman could have profound consequences, as it would jeopardize the institution's independence, a key principle for many economists and especially Wall Street investors. Powell's firing would shake financial markets, given that the Fed's stability has been critical to investor confidence in the U.S. economy. Trump has in the past referred to Powell disparagingly, calling him a "fool" and a "Trump hater," and has insisted on the need for more accommodative monetary policy. However, Trump appears to have modified his position, at least temporarily, acknowledging that firing Powell would be a "big decision" that he doesn't consider necessary for now.

The expensive Federal Reserve renovation project, which includes rehabilitating two historic buildings in downtown Washington, was approved by the Board of Governors in 2017. Costs have increased because of Trump's tariffs on steel and aluminum, as well as the broader increase in construction material prices following the pandemic.