US Federal Reserve Chair Jerome "Jay" Powell has come under renewed political and legal pressure following revelations that he formally briefed US senators about the Federal Reserve's controversial $2.5 billion headquarters renovation months before allegations surfaced that he had misled Congress.
According to reports by international media, Powell sent a four-page letter to the Senate Banking Committee in July last year outlining the scope, costs, and reasons behind the budget blowout associated with the renovation of the Fed's historic Washington headquarters. The correspondence was reportedly sent shortly after Powell testified before the committee in June.
The disclosure complicates the Trump administration's claims that Powell deliberately understated the project's scale during his congressional testimony. US President Donald Trump and senior officials have accused the Fed chair of failing to provide accurate information, leading to a criminal investigation by the Department of Justice (DOJ).
The renovation, first approved in 2017, is now running roughly US$700 million over its original budget. Powell has attributed the higher costs to factors including rising construction prices, labour shortages, inflation, and unexpected structural issues such as asbestos, contaminated soil, and groundwater complications.
In his letter to senators, Powell reportedly emphasised the Fed's commitment to transparency and accountability, noting that lawmakers had been given extensive information and that the central bank's inspector-general had full access to project details.
Despite this, the DoJ has escalated its probe, seeking subpoenas related to Powell's congressional testimony. While Powell has acknowledged the investigation, he has described it as unprecedented and suggested it forms part of broader political pressure on the Federal Reserve, particularly amid ongoing tensions over interest rate policy.
President Trump has denied direct involvement in the investigation but has repeatedly publicly criticised Powell, calling for his removal and questioning his competence. Powell's current term as Fed chair is set to expire in May, with the White House expected to announce a successor in the coming weeks.
For Australian investors, the situation raises broader concerns about the independence of the US Federal Reserve, a cornerstone of global financial stability. Any perception of political interference could influence market confidence, currency movements, and interest rate expectations worldwide — factors closely watched by ASX and international market participants.
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