Fed working with White House to accommodate Trump's visit

Reuters

3 days ago

July 24 (Reuters) - The Federal Reserve is working with the White House to accommodate President Donald Trump's unexpected visit to the U.S. central bank on Thursday, amid escalating tensions between the administration and the independent overseer of the nation's monetary policy.
"The Federal Reserve is working with the White House to accommodate their visit," a Fed spokesperson said.
Trump's visit to the Fed's headquarters in Washington, a rare appearance at the central bank by a U.S. president, was made public by the White House late on Wednesday.
The president has repeatedly demanded that Powell slash U.S. interest rates and has frequently raised the possibility of firing him, though Trump has said he does not intend to do so. On Tuesday, Trump called the Fed chief a "numbskull."
Trump will visit the Fed less than a week before the central bank's 19 policymakers gather for a two-day rate-setting meeting. They are widely expected to leave the central bank's benchmark interest rate in the 4.25%-4.50% range where it has been since December.
The visit also is taking place as Trump battles to deflect attention from a political crisis over his administration's refusal to release files related to convicted sex offender Jeffrey Epstein, reversing a campaign promise. Epstein died in 2019.
White House officials ramped up Trump's pressure campaign on Powell in recent weeks, accusing the Fed of mismanaging the renovation of two historic buildings in Washington and suggesting poor oversight and potential fraud.
The White House's budget director, Russell Vought, has pegged the cost overrun at "$700 million and counting," and Treasury Secretary Scott Bessent called for an extensive review of the Fed's non-monetary policy operations, citing operating losses at the central bank as a reason to question its spending on the renovation.
The Fed's operating losses stem from the mechanics of managing the policy rate to fight inflation, which include paying banks to park their cash at the central bank. The Fed reported a comprehensive net loss of $114.6 billion in 2023 and $77.5 billion in 2024, a reversal from years of big profits it turned over to the Treasury when interest rates - and inflation - were low.
The Fed, in letters to Vought and lawmakers backed up by documents posted on its website, says the project - the first full rehab of the central bank's two buildings in Washington since they were built nearly a century ago - ran into unexpected challenges including toxic materials abatement and higher-than-estimated materials and labor costs.
The White House's deputy chief of staff, James Blair, said this week that administration officials would be visiting the Fed on Thursday. Senate Banking Committee Chair Tim Scott, who has also raised questions about the buildings, will join the visit as well.
In a schedule released to the media on Wednesday night, the White House said Trump would visit the Fed at 4 p.m. EDT (2000 GMT) on Thursday. It did not say whether Trump would meet with Powell.
Market reaction to Trump's visit was subdued. The yield on benchmark 10-year Treasury bonds ticked higher after data showed new jobless claims dropped in the most recent week, signaling a stable labor market not in need of support from a Fed rate cut. Stocks on Wall Street were trading higher.
Trump's public criticism of Powell and flirtation with firing him have previously upset financial markets and threatened a key underpinning of the global financial system - that central banks are independent and free from political meddling.
His visit, against the backdrop of his antipathy for Powell, contrasts with a handful of documented previous presidential visits, including most recently former President George W. Bush's swearing-in of former Fed Chair Ben Bernanke.
Republican Senator Mike Rounds on Thursday said it's critical that Powell maintains his independence, but saw no problem with Trump's visit.
"I think the more information the president can glean from this, probably the better off we are in terms of resolving any issues that are outstanding," Rounds said, noting that Powell had indicated "that they have had a significant amount of money, just in terms of foundation work and so forth, that was not anticipated to begin with."
"I think he has to maintain his independence," Rounds said about Powell's role. "That's critical for the markets. I think he's done a good job of that."