What Sparked the Push for Powell to Go
Kevin Hassett, who ran the White House National Economic Council under President Donald Trump, said Jerome Powell should step aside from the Fed's Board of Governors. On Fox News' Sunday Morning Futures, he answered a question about whether Powell should resign by saying, "I think that it's time for him to move on and to respect the independence of the Fed."
Powell has remained on the Board since leaving the chair in May, bucking the usual pattern of former chairs departing once their leadership term ends. He has said he stayed on because potential criminal inquiries aimed at him and at the Federal Reserve made him feel obliged to do so. Trump and others in his administration have criticized that position, and Trump posted that Powell "should be forced to resign from the Board."
What the Watchdog Found and What Comes Next
The Fed's inspector general, in a report dated Sept. 30, said it did not uncover criminal wrongdoing and did not identify any "administrative misconduct" tied to the Washington headquarters renovation, now priced at $2.4 billion. The review did, however, point to management shortcomings that contributed to costs nearly doubling from the initial plan.
The Federal Reserve said it will bring in an independent auditor to dig into the building costs. US Attorney General Todd Blanche, whom Trump asked to review the inspector general's work, said Friday that the Justice Department would decline to revive any criminal probe into Powell on the strength of those findings. Blanche added that further steps remain possible: "I expect there will be an auditing process," and "If they learn anything that rises to any kind of criminal misconduct, you better believe we're going to investigate that."
Fed leadership questions move rate expectations well before any policy actually changes. Market Briefs follows the Fed free every morning.
Rates, Independence, and a Divided View
Even as Trump has repeatedly pushed for cheaper borrowing, the policy committee led by Chairman Kevin Warsh voted unanimously last month to lift interest rates by 0.25 percentage point in response to persistent inflation. Hassett remarked, "As you saw, that Chairman Warsh voted with people to increase interest rates," and added, "I disagree with that decision, but we respect that he was doing that for the right reasons." Trump has said Warsh, his choice to follow Powell as chair, should exercise independent judgment, while telling Time magazine, "I probably would have voted against the board if I were him."
What It Means for Your Money
The renovation review knocked down criminal and administrative allegations but spotlighted cost control problems, and a fresh audit is on the way. The bigger swing factor for your wallet is still interest rates. With inflation stubborn and the latest move a quarter-point hike, borrowing costs and the Fed's credibility are the real drivers to watch, while the Powell drama hums in the background.
Who sits on the board shapes mortgages, savings yields, and valuations alike. Get the free Market Briefs daily newsletter and track it.
