US President Donald Trump says he is considering a “major lawsuit” against Federal Reserve Chair Jerome Powell. Trump is doubling down on the Fed’s spending over renovations of the Central Bank’s buildings, which Powell has already labeled a misunderstanding. “Jerome ‘Too Late’ Powell must NOW lower the rate,” Trump wrote on his social media platform. “I am, though, considering allowing a major lawsuit against Powell to proceed because of the horrible, and grossly incompetent, job he has done in managing the construction of the Fed Buildings.”
Trump recently visited Powell and the Fed to discuss interest rate cuts and the Fed’s spending. When Trump brought up funding towards a still unfinished building, Powell explained that the funding being contested was for a building completed years ago, and the number Trump had in his Fed budget data was incorrect. The President insisted though that it was unjust spending, and also reiterated the need to cut interest rates. Now, Trump is reportedly ready to greenlight the “major lawsuit” against Powell.
Jerome Powell In Even Hotter Water After Trump Lawsuit Threat
On multiple occasions, the Federal Reserve and Jerome Powell have been in hot water over handling Fed spending and interest rate cuts. After refusing to cut interest rates yet again last month, Trump and Republican officials yet again called for Powell to step down, and even began considering new picks for Fed Chair. Trump won’t fire Jerome Powell, the president confirmed last month; however, there are increased chances that Powell may end up resigning.
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Furthermore, today’s reading on inflation showed tariffs are pushing goods prices higher for Americans, creating a dilemma for the Federal Reserve of whether to hold interest rates steady in September. The Consumer Price Index (CPI) for July showed prices, excluding volatile food and energy prices, rose 3.1% year over year. That was hotter than the 3% economists expected and up from 2.9% in June, when inflation was pushed higher by rising goods prices. Month-over-month CPI clocked in as expected, rising 0.3%.
The Fed has been largely in a “wait and see” mode, as many central bankers want to assess the impact of tariffs on inflation. Tariffs have given mixed results since Trump announced them in August, and will likely play a part in whatever decision Powell and the Fed make during remaining meetings this year.
