The Republican Party accuses "Powell of perjury" in the 2.5 billion dollar Federal Reserve decoration case, did Trump find a legal loophole to change the Fed's leadership?

Federal Reserve Chairman Jerome Powell has been embroiled in a perjury scandal over a $2.5 billion headquarters renovation project, with Republican Congresswoman Anna Paulina Luna officially filing criminal charges against Powell, putting the independence of the Fed and market confidence under dual pressure. This political crisis, ignited by renovation issues, could become a legal breakthrough for Trump to replace Powell. (Background: Powell previously stated, "I will not resign unless I am dead," marking the last bastion of the Fed's independence.) (Supplementary Background: Is it really so easy for Trump to replace Powell? A detailed explanation of how secure the Fed chair position is.) According to a report by Fox News, on July 21, Republican Congresswoman Anna Paulina Luna submitted a report to the Justice Department, filing criminal charges against Federal Reserve (Fed) Chairman Powell, claiming that Powell "made false statements" regarding the Fed headquarters renovation during congressional hearings. If the charges are substantiated, it could not only shake Powell's position but also push the long-standing issue of the Fed's independence to the forefront of politics. Perjury Controversy: The $2.5 Billion Renovation Case The focus of the case is on the renovation project of the Eccles Building in Washington, D.C. Official documents indicate that the project budget has ballooned from the initial $1.9 billion to $2.5 billion. Luna pointed out that investigators found documents mentioning facilities such as "VIP dining rooms, marble decorations, and rooftop gardens," which contradict Powell's statement during the hearings that there was "no luxury design." She questioned Powell's denial of a comprehensive renovation of the building between 1999 and 2003, while documents obtained by Congress clearly show that large-scale renovations did take place at that time. However, Powell has publicly denied all allegations of false statements and requested the Office of Inspector General to intervene in the investigation. He emphasized that the budget increase was a "normal change" and did not intentionally downplay the costs. Political Tension: The Long-term Opposition Between Trump and the Fed Legal experts point out that the intensity of this single administrative event is closely related to the tense relationship between the Trump administration and the Fed, as Trump has publicly pressured the Fed multiple times this year to cut interest rates to stimulate economic growth, threatening to remove Powell otherwise. However, U.S. law requires the president to provide "just cause" to remove the Fed chairman, and policy disagreements do not qualify as grounds for dismissal. Therefore, the "luxury" label of the renovation project has become convenient material for attacking Powell, and if Powell is found guilty of perjury, it could provide Trump with a legal avenue to fire Powell. However, some Republican senators remain cautious about actually using removal powers because they are concerned that it would undermine the customary independence of the monetary policy institution. Once Powell is forced to resign, the market will respond to the policy direction and political pressure of the next chair, and fluctuations in interest rates, the dollar, and the bond market will be difficult to avoid. System and Trust: Rising Calls for Congressional Oversight The renovation case has also reignited old flames in Congress regarding the financial transparency of the Fed, with several proposals in recent years calling for a comprehensive audit of the Fed, but always lacking the final push. Now, the "perjury gate" may become an accelerating catalyst, as lawmakers are concerned not only about the $2.5 billion funding but also about how public funds are audited and accounted for. If the auditing obligations increase, the Fed will face more frequent hearings and document disclosures when drafting its balance sheet or interest rate strategies in the future. For administrative agencies, trust is the scarcest currency. Powell has chosen to turn the issue over to the Inspector General, hoping to resolve the dispute through external review, but this also gives Congress more voice. In the coming days, the House may hold additional hearings and even summon contractors and design teams to clarify the exact reasons for the budget increase. Market Watch: Interest Rate Path and Global Capital Flows The renovation and decoration controversies remain a political spectacle for now, but financial markets have begun to calculate the tail risks. Investors may want to focus on two main lines going forward: whether the Justice Department will officially investigate, and whether Trump will use this as a reason to replace the chairman. Once an investigation is initiated, any public statements related to Powell may be closely scrutinized, and the market's expectations for the interest rate outlook will also widen accordingly. For forex and bond traders, the reputation and decision-making consistency of the Fed directly affect their funding costs. If the investigation takes time and results are uncertain, the dollar may experience range-bound fluctuations, while U.S. Treasury yields could be easily influenced by risk aversion sentiment. In other words, a controversy originating from the renovation budget has now linked to a larger test of the authority of the U.S. central bank, even affecting the global capital's reordering between risk and reward. Related Reports Trump Pressures Fed Chairman Powell: The Global Point Shaving Triggered by Fed Renovation Trump Writes Resignation Letter to 'Dethrone Fed's Powell,' WSJ: White House Announces New Fed Chairman Six Months in Advance to Bypass Restrictions Powell's First Day of Congressional Hearing: 'Significant Shift': Not Excluding Early Rate Cuts, but Economic Data for June and July is More Important (Republican Accusations of 'Powell Committing Perjury' Over the $2.5 Billion Fed Renovation Project, Could Trump Find a Legal Opening to Replace Powell?) 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