Republicans defended Jerome Powell during Trump's first term. That firewall is weakening

WASHINGTON — President Donald Trump badgered Federal Reserve chair Jerome Powell and said he had “No guts, no sense, no vision!” It was a fresh volley against the central bank for not lowering interest rates to provoke more economic activity.

That was six years ago during Trump’s first term. Back then, GOP lawmakers served as a firewall against the president’s attacks on the Fed. Then-Sen. Pat Toomey of Pennsylvania even said he was “grateful” for Powell effectively managing the task of keeping borrowing costs at manageable levels.

But that usual check from the legislative branch is starting to show signs of degradation six months into Trump’s second term. A small but growing contingent of Republicans are comfortable demanding Powell’s ouster for the Fed deciding to not adjust interest rates four times so far this year, and they’re latching onto the expensive renovations of two buildings at its historic headquarters as leverage.

"What we don't want to do is the Fed to be playing politics," Republican Sen. Markwayne Mullin of Oklahoma, a close Trump ally who believes Powell should step down, said Thursday. "And it appears like it is being political right now."

Even Republican Sen. Thom Tillis of North Carolina, who has defended the Fed’s independence, toured the Fed renovation site alongside Trump, Republican Senate Banking Chair Tim Scott of South Carolina, and other senior White House officials. “I'm just kind of curious about the due diligence,” Tillis, a member of the Senate Banking panel, said earlier in the day.

On Wednesday, Scott sent a letter addressed to Powell pressing for more information about the central bank’s “lavish” renovations and whether it matched Powell’s past testimony to Congress. That followed the launch of a formal probe by House Republicans into the Fed’s ongoing upgrades, now in its fifth year. And Rep. Lauren Boebert of Colorado, a hardline House conservative, issued a “criminal referral” to the Department of Justice over Powell’s oversight of the renovations. The referral doesn’t legally compel the DOJ to probe anything but it can influence their decision-making.

“I’ll continue pushing the Federal Reserve to increase transparency, rightsize rules and regulations, and avoid politics,” Scott said after the Fed visit.

The U.S. economy Trump inherited is in a much different position than it was in the low-interest environment of 2019. Consumer prices ballooned after the pandemic, and the Fed was slow to diagnose it as inflation that wasn't merely "transitory" but far more stubborn than that. They prescribed a solution in late 2022: raising interest rates. It was only last year that the Fed began dropping those rates. But the experience has contributed to some GOP wariness for the Fed's recent management of the U.S. economy.

Trump is in the middle of a one-sided firefight against the Fed with some GOP support, and he’s kept finding ways to raise the stakes against a studiously nonconfrontational Powell. Heightened economic uncertainty due to Trump’s tariff regime has prompted Fed officials to decide it’s best to sit tight on interest rates for the time being. The Fed is expected to make the same decision again at its two-day meeting next week.

But Powell does have a limit. During the tour, Powell corrected Trump about the cost of the renovation, now at $2.5 billion. Trump had asserted it was $3.1 billion since he tried factoring in another building that had been renovated five years ago. “It’s not new,” he said.

Trump unexpectedly dialed down his criticism of Powell on Friday in what might be a ceasefire, at least for now. “We had a very good meeting … I think we had a very good meeting on interest rates,” Trump told reporters, adding he believed Powell was “a good man.” It’s unclear whether or not Trump will pause his relentless attacks, but at least some Republicans will breathe a sigh of relief if he does.