- Trump threatened to allow a lawsuit against Powell over Fed HQ renovations he claims are wildly over budget.
- The president is ramping up calls for immediate, steep interest rate cuts, blaming Powell for acting “too late.”
- Markets are watching both the legal drama and September’s Fed meeting for clues on rates.
President Donald Trump turned up the heat on Federal Reserve Chairman Jerome Powell on Tuesday, hinting at allowing a “major lawsuit” to move forward — a move he says could hold Powell accountable for costly renovations at the Fed’s Washington, D.C., headquarters.
The warning came in a Truth Social post, where Trump blasted Powell for what he described as a “grossly incompetent” job overseeing construction costs. “Three Billion Dollars for a job that should have been a $50 Million Dollar fix up. Not good!” Trump wrote, accusing Powell of mismanagement while renewing his push for immediate interest rate cuts.
Trump also took aim at former Treasury Secretary Steven Mnuchin, saying Mnuchin had pushed him to nominate Powell back in 2017. The president, in his usual style, nicknamed the Fed chief “Jerome ‘Too Late’ Powell” — arguing that Powell’s delayed moves have caused “incalculable” damage, even as Trump claimed the economy has powered ahead despite the Fed.
Clash Over Rates and Policy
Trump’s public frustration centers on the Fed’s refusal to slash interest rates in 2025, despite cutting them multiple times in 2024 under President Biden. Powell has insisted rates remain steady this year, pointing to the inflationary impact of Trump’s own tariff policies. In testimony before Congress in July, Powell even stated that the Fed might have already cut rates if not for the administration’s sweeping import duties.
Fed officials have signaled they expect two rate cuts before year-end, and traders now largely anticipate a quarter-point trim in September, with the possibility of additional cuts in October and December.
Fed Renovation Dispute
The brewing legal threat is tied to ongoing renovations of two historic Fed buildings. Trump claims the projects’ costs have ballooned past $3 billion, while Powell, during a tense exchange at the construction site last month, said he’d “never heard that from anybody.”
The Fed has defended the expense increases, citing the scope of work on the aging structures. But Trump has repeatedly used the project as a symbol of what he calls Powell’s incompetence — positioning it alongside his broader criticism of the Fed’s policy direction.
What’s Next
It’s still unclear who would file the lawsuit or when. The White House has not commented, and the Fed declined to respond to Trump’s latest remarks. For now, markets are eyeing both the legal rhetoric and the Fed’s September meeting, with rate cut speculation heating up as political pressure mounts.
