– This is the script of CNBC’s financial news report for China’s CCTV on July 25, 2025.
It is quite rare for a U.S. president to visit the Federal Reserve building. President Trump thus became the first sitting president in nearly 20 years to visit the institution. The stated reason for Trump’s visit was the renovation project of the Federal Reserve building.
Reportedly, the cost of this renovation has surged significantly over the past few years, with the budget increasing from $1.9 billion in 2023 to $2.5 billion by 2025. Trump’s latest allegations suggest that the cost has now risen to $3.1 billion.
Let’s analyze the situation objectively: why has the cost of the Federal Reserve renovation skyrocketed?
According to The Wall Street Journal, the main reasons include unexpected structural and environmental challenges during the renovation process. For example, the groundwater level at the construction site was higher than anticipated, requiring costly drainage efforts. Additionally, asbestos and other toxic pollutants were discovered in the soil, necessitating removal. On top of that, since 2019, the costs of construction materials and labor in the U.S. have been steadily rising.
Some construction experts expressed understanding, noting that renovating old buildings often involves complex issues that make cost control difficult. However, critics have questioned the necessity of the renovation, arguing that building a new headquarters might be more economical. Others have accused the Federal Reserve of lacking external audits, leading to opaque spending.
Thus, there are differing opinions regarding the renovation project. However, former Federal Reserve Vice Chair Roger Ferguson told CNBC that Trump’s visit was not merely about the renovation costs. His primary intention was to exert pressure for interest rate cuts.
Roger Ferguson
Fmr. Federal Reserve Vice Chairman
“let’s be very clear, it has very little to do with the building. That is the cudgel that’s being used right now to try to do something I think is very unwise. The President is trying to pressure the Federal Reserve, including the chairman, to lower rates at a time when I think the data don’t support that.”
Discussions about the pace of Federal Reserve interest rate cuts have resurfaced in the market.
Some analysts suggest that one of Trump’s considerations in pushing for rate cuts is to boost the U.S. real estate market. However, U.S. mortgage rates are more influenced by the yield on 10-year Treasury bonds rather than the short-term rates directly controlled by the Federal Reserve. The transmission pathway between short-term and long-term rates is indirect, and the impact remains uncertain.
At the same time, Trump hopes to reduce the U.S. government’s financing costs through rate cuts. However, if the market perceives that the Federal Reserve is easing prematurely while inflationary pressures have not yet subsided, it could instead raise long-term inflation expectations. This would lead to an increase in long-term interest rates, causing government borrowing costs to rise rather than fall.
Additionally, even if the Federal Reserve does cut rates, the market might interpret this as a sign of worsening economic prospects, thereby triggering new concerns. In summary, many experts remain skeptical about whether rate cuts at this moment can truly achieve the desired simulative effects.
Adam Parker
Trivariate Research Founder
“maybe you’ll get a knee jerk reaction that one day, but underneath it, like, Do you really think there’s things that are gonna get stimulated by cutting the front end? “
