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New York Times
21-07-2025
- Business
- New York Times
Fed Takes Fresh Steps to Defend Renovations as White House Intensifies Attacks
The Federal Reserve on Monday took additional steps to defend the renovations underway at its headquarters in Washington, as top Trump administration officials show little sign of backing down from allegations that the roughly $2.5 billion project has been mismanaged. The central bank on Monday published a virtual tour of the active construction site, including footage of asbestos caulking being removed and the blast resistant windows being installed. The Fed, which has said that it has scaled back its initial plans, highlighted changes made to a 2021 proposal submitted to a little-known planning board. The Fed's renovation has become central to the administration's attempts to undermine and potentially oust Jerome H. Powell, the chair of the central bank. The White House has fixated on the project's cost overruns, as well as what it described as luxury features included in the initial plan submitted to the National Capital Planning Commission. Those had included new water fountains and a roof terrace for staff, neither of which are part of the latest proposal. The Fed has also clarified that its headquarters will not have a V.I.P. dining room or private elevators, both of which had previously garnered criticism from the White House. Top administration officials, including James Blair, the White House's deputy chief of staff, have demanded a tour of the construction site. On Friday, Mr. Blair, newly appointed to the National Capital Planning Commission, rejected an offer by the Fed to visit at 7 p.m. that evening and said he did not want to see the site after-hours. 'We want to see what's going on,' he told reporters. 'We want to see what the construction is like.' Mr. Blair has referred to the Fed's headquarters as the 'Taj Mahal on the National Mall.' He also has gone after Mr. Powell directly, posting a meme on social media of the central bank chair dressed as Marie Antoinette that read, 'Let them eat basis points.' Want all of The Times? Subscribe.
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Business Standard
28-04-2025
- Business
- Business Standard
Uncertain dollar creates opportunity for euro, can the rally last?
President Trump's shake-up of the global trade system has sent tremors through the long-held view that the United States is the source of the world's safest financial assets. That's created an opportunity for Europe. The market tumult in which investors simultaneously sold off the US dollar, American stocks and US Treasury bonds eased last week as Trump backed off his threats to fire the Federal Reserve chair, Jerome H Powell, and Treasury Secretary Scott Bessent tried to reassure foreign officials that trade deals would be struck. But many European officials attending the spring meetings of the International Monetary Fund and World Bank in Washington last week were sceptical that the uncertainty over Trump's trade policy would dissipate any time soon. They said the unpredictable nature of the Trump administration's approach to setting policy would not easily be forgotten. Instead, they saw the potential to attract investors to European assets, from the euro to the bond market. 'We see that our stability, predictability and respect for the rule of law is already proving a strength,' Valdis Dombrovskis, the European commissioner responsible for the trade bloc's economy, said on Wednesday in a discussion on the sidelines of the IMF meetings. 'We already have stronger investor interest in euro-denominated assets.' The most comprehensive indication that funds are flowing to Europe: Since the beginning of April, the euro has gained 5.4 per cent against the dollar, rising above $1.13, the highest level since late 2021. The question among policymakers and investors is whether the recent jump in the euro and other euro-denominated assets is simply a short-term rebalancing of portfolios that heavily favored the dollar or the beginning of a long-term trend in which the euro firmly encroaches on the dollar's role as the world's dominant currency. A troubled past 'There's a lot of enthusiasm about Europe,' Kristin J Forbes, an economist at the Massachusetts Institute of Technology, said in an interview. She said the excitement about the euro reminded her of the currency's founding in 1999, when some economists and policymakers raised the prospect of it replacing the dollar. In its early years, the euro's international use exceeded the combined use of the currencies it replaced. But then the euro was hit by crises. Despite having a monetary union of a dozen members, including Germany, Europe's largest economy, the region remained politically fragmented, sapping confidence in the currency. The sovereign debt crisis in 2012, followed by a decade of ultra low interest rates, meant the region's bonds offered low returns. The euro is now used by 20 member countries and represents about 20 percent of the world's central banks foreign exchange reserves, a figure that has barely budged in the past two decades. Thirty per cent of global exports are invoiced in euros, whereas more than half are in dollars. Improvements have been made on some of the issues that previously deterred foreign investors. Today, European bonds are providing better returns, and investors trust that the European Central Bank will be the lender of last resort, minimising the risk that one country's economic troubles could affect all euro assets. For investors, the most promising new development is the prospect of Germany issuing about 1 trillion euros in additional government debt, known as bunds and considered the safest euro-denominated assets. For years, Germany's strict fiscal conservatism has restrained the supply of bunds. But last month, Parliament altered the borrowing limits anchored in its constitution, the so-called debt brake, to allow the government to borrow hundreds of millions of euros to invest in the military and infrastructure. 'There are cheers in Europe' because of Germany's fiscal stimulus, said Kristalina Georgieva, the IMF managing director. 'And it adds something that is not tangible, but it is important — confidence.' Although there has been confusion and frustration with the Trump's trade policies, many European officials, including central bankers, emphasised the need for Europe to seize this moment. 'This will be a time of creativity and pragmatism, getting things moving,' Olli Rehn, the governor of the Finnish central bank, said in a speech. 'I am very much looking forward to this period as a positive challenge because we are very serious about reinforcing common defense in Europe. Which will, by the way, need safe assets.' ©2025 The New York Times News Service
