The Federal Reserve's internal watchdog has concluded that the agency mismanaged a $2.4bn building renovation project, finding widespread management failures but no criminal violations. This conclusion provides vindication for former Fed chair Jerome Powell, whose conduct had been scrutinised by the Trump administration's Department of Justice as part of broader attempts to pressure the Federal Reserve into cutting interest rates.

The renovation costs more than doubled from an initial estimate of $921m in February 2020 to $2.018bn by December 2024, with completion now not expected until December 2027 rather than mid-2024. The inspector general identified that the Federal Reserve's board failed to establish a maximum cost ceiling before construction began in 2022, leaving the contractor free to pass inflation impacts to the Fed. Contrary to Trump administration criticism, luxury items such as water fountains, private elevators and marble facades were not significant cost drivers; instead, a 2023 design change from open workspaces to mostly closed offices caused substantial delays and additional expense.