On July 22, Federal Reserve Chairman Powell will attend a banking supervision-related meeting and deliver an opening speech at 8:30 PM Beijing time. Due to recent pressure from Trump and Republican lawmakers regarding the Fed headquarters renovation project's cost overruns, his speech tonight is attracting widespread attention from traders and investors. Powell is expected to avoid directly addressing the issue and may instead emphasize the importance of the Federal Reserve's independence.
The renovation budget for the Federal Reserve headquarters has surged from $1.5 billion to $2.5-2.6 billion, far exceeding expectations, with rumors of luxurious facilities like a rooftop garden and private elevators, raising public and political suspicions of extravagance. Trump and others have seized the opportunity to criticize Powell and question his transparency. The Fed responded that the cost overrun was due to rising material costs and unexpected issues, with funding from its own income rather than taxpayer money, but the controversy remains unresolved and could potentially impact its reputation and independence. The market speculates that Trump might use this as grounds to dismiss Powell. When asked last week about potentially firing Powell, Trump stated that the possibility is extremely low unless fraud is involved.
