Trump has wanted to fire Federal Reserve Chair Jerome Powell. A costly Fed renovation project could provide the reason.

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With estimates of the ongoing project reaching $2.5 billion or higher, Trump and other White House officials have accused Powell of mismanagement and wasting money on what critics have compared to the Palace of Versailles and the Taj Mahal.

“It’s possible there’s fraud involved with the $2.5, $2.7 billion renovation,” Trump told reporters Wednesday after a CNBC report that he was likely to fire Powell soon.

Trump said it was “highly unlikely” he would fire Powell, whose term as chair doesn’t expire until May 2026, “unless he has to leave for fraud.” But the president said he polled a dozen House Republicans meeting with him Tuesday and said they all told him they wanted Powell fired.

“Fortunately we get to make a change in the next eight months or so, and we’ll pick somebody that’s good,” Trump said. He declared surprise that Powell was appointed as chair in the first place. But it was Trump who first appointed him to the position in 2018. President Joe Biden re-upped Powell to another four-year term in 2022.

The battle over interest rates is a continuation from his first term, when Trump quickly soured on Powell, a Republican, over the same issue, said Stephen Moore, an informal Trump economic adviser.

“He’d say, ‘Steve, one of my worst mistakes was Jerome Powell,’ ” recalled Moore, a senior visiting fellow in economics at the conservative Heritage Foundation think tank.

With interest rates much higher this year, “Trump wants Powell out of there as soon as possible,” Moore said. “The White House is looking for any possible way to discredit Jerome Powell right now.”

Senator Elizabeth Warren, a Massachusetts Democrat who has clashed with Powell herself over the years, said Trump has been looking to fire Powell for months and shaking investor confidence in US government bonds in the process.

“When he said he was going to do it back in [the spring], it tanked the bond market, so he backed off. But he hasn’t given up on the effort,” Warren told the Globe. “Now he’s suddenly interested in how much the Fed has spent on plumbing and painting to repair a 90-year-old building. That smells a lot like pretext.”

Powell has been adamant publicly that he will not step down before his term ends and that Trump can not legally fire him over policy disputes. The Supreme Court appeared to back up that view in May in a case about the dismissal of members of two other independent boards, saying the Fed was “uniquely structured.”

Powell would be expected to sue if he’s fired and would win because the renovation project isn’t a valid cause, predicted Jaret Seiberg, a Washington financial policy analyst at investment bank TD Cowen.

The Fed adjusts its benchmark interest rate in response to economic conditions. Like central banks in other advanced nations, the Fed is independent to ensure monetary policy decisions are made soley for economic reasons. Investor confidence could be shaken if they believed the decisions were made for political reasons.

To battle high inflation, the Fed raised its interest rate sharply to more than 5 percent starting in 2022. Powell and Fed officials were criticized for waiting too long to try to rein in rising inflation, arguing it would be temporary as the economy reopened after the pandemic.

The higher interest rates, along with easing supply chains, helped push inflation down. Fed officials began slowly lowering interest rates in 2024 and forecast that it would continue that effort this year.

But after taking office in January, Trump hiked tariffs and has threatened even higher ones in a chaotic trade war. Adding tariffs to the prices of goods risks reigniting high inflation—recent data has showed prices have started climbing—and the Fed’s monetary policy board has voted along with Powell to keep the key interest rate at between 4.25 percent and 4.5 percent all year amid the uncertainty.

That has infuriated Trump. Higher interest rates slow economic growth and also affect the rates business owners pay to borrow money.

Trump has tried publicly and privately bullying Powell to lower interest rates, falsely asserting there’s no inflation, but that effort hasn’t worked. So the White House and its allies recently launched a different strategy focused on the Fed’s renovation and expansion project, which began in 2018.

Powell was grilled about the costs when he appeared before the Senate banking committee on June 25.

“We can all agree that updating aging infrastructure is a legitimate need,” the panel’s chairman, Republican Tim Scott of South Carolina, said in noting the estimated cost of the project had increased by about a third from it’s original $1.9 billion price tag. “But when senior citizens can barely afford Formica countertops, it sends the wrong message to spend public money on luxury upgrades that feel more like they belong in the Palace of Versailles than a public institution.”

Scott said the “lavish renovations” included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes, and even a private art collection.”

Powell said the Fed’s main building, opened in 1937, “needed a serious renovation.” He called some of the accusations, based on media reports, “misleading and inaccurate” and not in the current plans.

“There’s no new marble. We took down the old marble. We’re putting it back up. We’ll have to use new marble where some of the old marble broke,” he said. “There are no special elevators. They’re old elevators that have been there. There are no new water features. There’s … no roof terrace gardens.”

But his testimony didn’t squelch the controversy.

Last week, Russ Vought, director of the White House Office of Management and Budget, posted a letter he wrote to Powell on social media that said Trump “is extremely troubled” by his management of the Fed and criticizing “an ostentatious overhaul” of its headquarters.

Vought suggested that changes the Fed made to the renovation plans would put it out of compliance with the approval it received in 2021 from the National Capital Planning Commission. That night, three Trump White House officials appointed to the commission, including the new chair, attending their first meeting of the obscure panel and each took time to specifically criticize the Fed renovations.

“Some have started to refer to this as the Taj Mahal near the National Mall,” James Blair, White House deputy chief of staff, said at the meeting. He said he would request “a full review of plans of the Federal Reserve project” and a site visit.

To try to mitigate the controversy, the Federal Reserve has posted a lengthy question and answer page on its website about the project. It said the cost overruns have come partly because of increases in the cost of materials and labor and “unforeseen conditions,” including toxic contamination in the soil and more asbestos than anticipated.

Powell also reportedly has asked the Fed’s Inspector General to review the project.

Senator Cynthia Lummis, a Wyoming Republican on the banking committee, said the cost overruns are “spectacularly large” and just one of several problems she has with Powell’s leadership, including his handling of interest rates. But she doesn’t think he can be fired.

“That’s why I think he should resign instead,” Lummis said.

But another Republican on the committee, Senator Thom Tillis of North Carolina, said the whole controversy is “silly,” noting other Washington renovation projects, like $257 million in the recently enacted “beautiful” tax bill for work at the John F. Kennedy Center for the Performing Arts.

Tillis said the White House is just trying to look for a reason to fire Powell.

“I just can’t imagine that they’re building a Taj Mahal there,” Tillis said. “It just doesn’t work with what I know about Jay Powell.”

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Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera.