White House Increases Pressure on Fed Chair Powell Amid Renovation Probe

President Trump has intensified his campaign against Federal Reserve Chair Jerome Powell, focusing particularly on a $2.5 billion renovation of the Federal Reserve’s Washington, D.C., headquarters, which Trump allies criticize as mismanaged and potentially costly. This scrutiny includes an ongoing inspector general review and a broader White House pressure strategy that may aim to remove Powell for cause before his term ends. Investors are responding to Trump's repeated calls for Powell's resignation by hedging against rising inflation risks, as a more dovish Federal Reserve could weaken the dollar, increase bond market volatility, and raise long-term borrowing costs. The U.S. 30-Year Treasury bond yield recently rose above 5%, reflecting market concern over fiscal deficits and political interference in Fed independence. JPMorgan CEO Jamie Dimon and other analysts warn that undermining the Federal Reserve's autonomy could have unintended consequences, including increased financial market volatility and a steeper yield curve driven by higher inflation expectations. Meanwhile, housing costs remain a significant inflation driver, adding to the economic challenges the Federal Reserve faces amid these political pressures.