Trump Threatens Legal Action Against Powell Over Fed Renovations, Demands Rate Cuts
President Donald Trump has intensified his public pressure on Federal Reserve Chairman Jerome Powell to cut interest rates, while threatening to allow a lawsuit against the central bank’s $3.1 billion renovation project to move forward. The allegations target Powell for allegedly failing to address inflation and for overseeing a costly renovation, which Trump claims should have been a low-cost fix.
Trump’s latest outburst on Truth Social targeted Powell, accusing him of ‘always being Too Late’ and criticizing the Federal Reserve’s $3.1 billion renovation project. The president suggested that the overhaul, which focuses on two historic buildings in Washington, D.C., could have been completed for just $50 million. This comes as Trump continues to push for interest rate cuts, arguing that the current rates are stifling American economic growth.
The Federal Reserve has defended the renovation project, noting that it’s necessary structural updates and fully compliant with approved plans. Trump’s repeated criticisms reflect his broader efforts to influence Fed policy, even though he appointed Powell in 2017. A Fed spokesperson declined to comment on the allegations. Meanwhile, Rep. Anna Paulina Luna, R-Fla., has already referred Powell to the Department of Justice for potential criminal charges, claiming he misrepresented the building’s condition and amenities.
Trump’s comments add to the growing political pressure on the Fed as it prepares for an upcoming FOM, which will meet again on September 17–18. The FOMC’s decision-making process, which involves a 12-member panel, is the main body responsible for setting interest rates. The current benchmark rate, set at 4.25%-4.5%, has been a point of contention for Trump, who argues that lower rates would stimulate economic growth. However, the Fed maintains its position that the current rates are appropriate given the inflation outlook.
In recent weeks, Trump has been using his social media platform to criticize Fed policies, accusing them of holding the economy back. The latest allegations against Powell come as part of his broader strategy to challenge the Fed’s economic policies, particularly as the U.S. economy shows signs of slowing down. Trump’s threat of legal action against Powell adds a new dimension to the tensions between the president and the central bank, which has been a recurring theme throughout his presidency.
The potential for a lawsuit against Powell highlights the ongoing political battle over monetary policy. While the Fed remains focused on its mandate to maintain price stability and maximum employment, Trump’s demands reflect a more populist approach to economic management. The situation underscores the challenges faced by the central bank as it navigates increasing public scrutiny and political pressure from the executive branch.
As the FOMC prepares for its next meeting, the pressure on Powell to act on interest rates is likely to continue. Trump’s threats of legal action against Powell, combined with the political climate, could influence the Fed’s decisions. However, the Fed has stated that its decisions are based on economic data and its mandate, not political considerations. This dynamic is expected to remain a key point of contention as the U.S. economy continues to evolve.