Alberto Musalem doubles independence in the discussion of the produced headquarters
In addition to writing letters to hundreds of world leaders this week, the White House also found time to write letters to Chairman Jerome Powell, who criticizes leadership.
Las Vault, the president’s top budget advisor; It was revealed yesterday He wrote to the boss of the Federal Reserve that the president has been “very troubled” by renovations to the Fed’s office building, claiming that Powell “severely mismanaged” the facility.
Explosion of letters “Exaggerated Overhaul” (which Vouted wrote exceeds the $700 million tone budget) comes as an escalation or change in the White House federal open market committee, more specifically, the ongoing battle. That leader.
Chairman Jerome Powell mismanaged the Fed.
While continuing to run the deficit since 2023 (the first in the Fed’s history), the Fed has exceeded its headquarters renovation budget.
Currently, it is up to $2.5 billion and approximately $700 million in initial costs. pic.twitter.com/lhk4cwlavf– russ vought (@RussVought) July 10, 2025
Despite pushing from Trump 2.0 for efficiency, Vought’s questions are to some extent in conflict with the Federal Reserve Act. Give the Fed permissions To maintain or modify a building when it appears necessary.
“The Federal Reserve Board should have the power to tax the Federal Reserve Bank in proportion to capital stocks and surplus, and is an valuation sufficient to pay the estimated costs. That decision alone is intended to provide a suitable and appropriate quarter for the performance of its function.
“The Board may maintain, expand or modify a building or building solely acquired or constructed, and may have sole control over such buildings and spaces within it.”
Even before President Trump and J.D. Vance won the presidential election, the duo hinted that they wanted more about how the federal government mandated independent Fed operates.
Before the election, Trump called Powell “political” and said interest rate cuts would prove that the FOMC is trying to support the Biden administration.
Since winning the election, Trump has been constantly lobbying for cuts to the extent that he threatens to fire Powell. The turn passes the transmitted shock wave to the market.
in spite of U-turns against the threat of firingPresident Trump continues to criticize Powell. including calling him “silly” and “hard head”; And he said You need to resign.
Vance’s argument is that decisions on such a major lever of the economy are It should be decided more diplomaticallylast summer, “Whether a country goes to war, what our interest rates are, these are important questions that American democracy should have an important answer, and I think all President Trump is saying.
Why is Fed independence so important?
The reasoning is clear. To achieve the double mission of the Fed inflation at 2% and maximum employment, interest rate levels should be set by independent economists who work for the long-term benefits of the American people, as opposed to the requests of politicians in the White House.
The importance of Fed Independence was repeated yesterday by Alberto Musalem, president and CEO of the Federal Reserve.
Responding to questions from luck During a roundtable discussion using an independent think tank OMFIF, Musalem explained: “Looking at empirical evidence over many countries and years, independent central banks can produce better inflation and better employment outcomes, meaning lower and stable inflation and more stable employment.”
Musalem previously worked in the International Monetary Fund (IMF) and many private investment businesses.
He added: “I observed that empirical evidence was true in my career.”
Examples of political intervention in the Fed have not worked in the past –Photographing Richard Nixon’s Fed Chairman Arthur Burns, for example.
Burns is dubbed by many people Worst leader in Fed historyin the 1970s, the period of male dogs (high inflation and low growth) was mainly sided. According to some historians, this was partly because he had not stubbornly stood up in his oval office.
“Country with more independent central banks can control inflation expectations and keep them in a better fixed state. If they can better maintain inflation expectations, it means that they may become more sensitive to employment and activities when there is a shock to the economy,” added President Musalem. “It’s good to be able to do that.”
Despite nominating Powell as the Fed chairperson himself, President Trump keeps little secret in the fact that he wants to see someone more stubborn in the role. Certainly, the latter half of last month He told reporters, “We’re going to put people who want to cut interest rates.”
President Musalem maintained the need for a board of directors responsible for the public by saying, “We, in the Fed, have instruments (AL) and operational independence, but the maximum employment and price stability goals are set by Congress and are accountable to Congress.”