Trump Threatens Lawsuit Over Fed Renovations and Rate Cuts Amid 94.2% September Cut Odds

Donald Trump has escalated tensions with Federal Reserve Chair Jerome Powell, announcing on Truth Social that he is considering filing a lawsuit against the central bank leader over what he described as "egregious" mismanagement of the Fed building renovations [1]. The accused Powell of allowing construction costs to balloon to $3 billion, far exceeding what he claimed could have been spent for $50 million. Trump also criticized Powell for being "always late" in cutting interest rates, a sentiment he has repeated multiple times, and stated that the damage caused by delayed rate cuts was "incalculable." These comments follow the release of recent U.S. inflation data and come amid an ongoing feud between Trump and the Fed on monetary policy [1].

The July inflation figures, which showed a moderate reading, have increased expectations for a rate cut at the Fed’s September meeting. According to Wall Street Journal reporter Nick Timiraos, widely regarded in media circles as the “Fed spokesperson” due to his in-depth coverage of the central bank, the latest data did not provide a strong enough case to rule out a rate cut [1]. Timiraos noted that while inflation remains a concern, the level reported in July was not high enough to derail the Fed’s anticipated policy move. He emphasized that the bar for a rate cut had already shifted following the July employment report, which suggested a cooling labor market and reduced inflationary pressure [1].

Timiraos further stated that the central bank is unlikely to alter its current trajectory, even in the face of political pressure. His analysis has added to the debate over the Fed’s independence and the extent to which political figures can influence public perception of monetary policy. While Trump's threat to sue Powell is not expected to directly affect the Fed’s actions, it has introduced an element of unpredictability into the public discourse and raised questions about the potential impact on investor confidence [1].

Market pricing reflects these developments, with the probability of a 25 basis point rate cut in September currently standing at 94.2%. As the Fed prepares for its upcoming policy meeting, the interplay between economic data, political rhetoric, and institutional independence will remain a focal point for both market participants and policymakers [1].

Sources:

[1] Exciting Moments After US Inflation Data: Trump Threatens Lawsuit Against Jerome Powell! – Journalist Nicknamed "FED Spokesperson" Makes September Prediction: "Decision Won't Change!"

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