Trump Threatens Lawsuit Against Powell Over Fed Renovation Costs and Rate Policy

Donald Trump has escalated his public feud with Federal Reserve Chair Jerome Powell, linking his threat of a "major lawsuit" against the Fed chair directly to his push for aggressive interest rate cuts. In a post on Truth Social on Tuesday, Trump accused Powell of turning a $50 million renovation of the Fed’s headquarters into a $3.1 billion project, calling the expenditure “horrible” and “grossly incompetent.” He labeled Powell “Too Late,” suggesting his leadership has caused “incalculable” damage to the economy. Trump also criticized former Treasury Secretary Steven Mnuchin for endorsing Powell in 2017, referring to him as having “given me a beauty” [1].

The lawsuit threat represents the latest development in Trump’s ongoing campaign to pressure the Fed into cutting interest rates. Trump has repeatedly called for immediate reductions, arguing that lowering rates by several points would save the U.S. substantial sums and ease debt obligations. However, the Federal Reserve has maintained a firm stance, with rates remaining unchanged in 2025 following a series of cuts in 2024, the last year of Joe Biden’s presidency. In congressional testimony earlier this year, Powell stated that rate easing would have already occurred if not for the economic uncertainty caused by Trump’s tariff policies.

Trump’s frustration with the Fed became public last month when he visited the renovation site and confronted Powell over the $3.1 billion cost. Powell quickly disputed the figure, saying he had “not heard that from anybody.” The Fed has explained the rising costs as a result of construction challenges and the need to modernize and preserve the historic buildings. Trump, however, continues to frame the project as emblematic of government waste and mismanagement.

Meanwhile, the Trump administration is reportedly compiling a shortlist of potential successors to Powell for when his term ends in 2026. Among the names considered are current Fed Vice Chairs Philip Jefferson and Michelle Bowman, Dallas Fed President Lorie Logan, former St. Louis Fed President Jim Bullard, and macroeconomic consultant Marc Sumerlin. Additional candidates include National Economic Council Director Kevin Hassett, former Fed board member Kevin Warsh, and current board member Christopher Waller. According to reports, the administration is seeking a balance between candidates from within the Fed and outside experts, aiming to find someone who can both satisfy Trump’s demands for rate cuts and uphold the Fed’s institutional credibility [1].

The challenge in selecting the next Fed chair is significant. The appointee will inherit an institution responsible for managing not only U.S. monetary policy but also banking regulation and the oversight of the national payments system. At the same time, they will need to navigate the pressure for rapid rate cuts without compromising the Fed’s independence in managing inflation. As Trump insists on political influence over the Fed’s operations, the balance between policy effectiveness and institutional integrity remains a pressing concern.

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[1] https://coinmarketcap.com/community/articles/689b63c9514d58629a0d0558/