Trump threatens Fed Chairman Powell with 'major lawsuit' and demands rate cut
2025-08-13 02:13:05
On Tuesday (August 12), US President Trump posted on the TruthSocial platform, threatening to allow a "major lawsuit" against Federal Reserve Chairman Jerome Powell to proceed, while renewing pressure for an immediate interest rate cut to lower government borrowing costs. In the post, Trump said the potential lawsuit involved Powell's management of the renovation project of the Federal Reserve's Washington headquarters building, and he criticized the project's cost, which soared from an initial $50 million to more than $3 billion.
"Jerome Sluggish Powell must cut rates now," he wrote, accusing former Treasury Secretary Steven Mnuchin of "digging a big hole" when he recommended Powell in 2017.
Trump further stated that despite trade tensions and geopolitical risks, the U.S. economy has performed well and has overcome the influence of Powell and the Federal Reserve Board. However, he emphasized Powell's "gross incompetence" in the building renovation and considered allowing the lawsuit to move forward.
Trump claimed the renovation project, which should have cost only $50 million, cost $3 billion, calling it "outrageous." The accusation stems from Trump's long-standing criticism of a renovation project at the Federal Reserve's two historic buildings, which aims to repair aging infrastructure, including treating toxic soil and consolidating office functions.
White House spokeswoman Kelly Levitt confirmed at a press conference that Trump was indeed considering the lawsuit, but declined to provide further details.
Neither the Federal Reserve nor Powell himself commented on Trump's post.
The Fed has previously defended the rising cost of the historic building, arguing there were legitimate reasons for the cost, including unexpected contaminants and construction complexities. When Trump visited the site last month, Powell dismissed the $3.1 billion figure, saying, "I've never heard that from anybody."
Trump has for months been bashing Powell, demanding a steep rate cut of several percentage points, saying it would save huge amounts of money.
The Federal Reserve raised interest rates in 2022 to respond to post-epidemic inflation, and gradually lowered interest rates in 2024, but has remained unchanged since 2025, with the benchmark interest rate remaining at 4.25%-4.50%.
Powell said in congressional testimony in July that the Fed would have cut interest rates without the major tariffs.
The Fed in June projected two rate cuts this year, with traders pricing in a quarter-point reduction after its September meeting and further cuts in October and December.
Trump's pressure stems from his dissatisfaction with the Federal Reserve's independence and his belief that rate cuts would offset price increases caused by his tariff policies and reduce the cost of financing government debt.
The event comes as the Federal Reserve faces multiple pressures, including inflation holding steady at 2.7%, slowing economic growth, and economic uncertainty fueled by trade policies promoted by the Trump administration. Market reaction was muted, with the Dow Jones Industrial Average edging slightly higher, reflecting investor concerns about political interference in the Fed.
Low likelihood of successful litigation
Although Trump's threat has attracted widespread attention, legal experts and analysts generally believe that the potential lawsuit is unlikely to succeed, mainly because the Federal Reserve is an independent institution whose decisions are protected by law, and the building renovation project was approved by Congress and there are objective reasons for the cost increase.
While Trump's attack involves "significant litigation," it lacks legal basis because the Fed renovation project is a use of public funds authorized by Congress and Powell is not solely responsible for all decisions. Any attempt by the Trump administration to intervene in the Fed through litigation could face constitutional challenges because the Fed's independence is designed to prevent political manipulation of monetary policy.
Trump and his allies have accused the Fed headquarters reconstruction of mismanagement, but the project's cost rose from $250 million to about $300 million, primarily due to unexpected environmental issues such as toxic soil and construction complexities, not corruption. Any lawsuit would need to prove personal malfeasance by Powell, and the Fed has publicly explained the cost increases and obtained congressional oversight.
Politico previously reported that lawyers within the Trump team had warned of the high legal risks of such actions, including that attempts to fire Powell had been shelved due to legal uncertainty. The report emphasized that federal law protects the Federal Reserve chairman from arbitrary dismissal unless there is "good cause," and building renovations are unlikely to constitute such grounds.
CNN analysis believes that this threat is more of a political gesture aimed at pressuring Powell to cut interest rates rather than a viable legal action. As president, Trump does not have the authority to directly file a lawsuit against Federal Reserve officials and must go through the Department of Justice, which may violate the Federal Reserve's principle of independence.
Historical precedent shows that presidential attempts to intervene in the Fed often fail, such as when political pressure during the Nixon era ultimately led to runaway inflation.
Analysts believe that if the lawsuit goes forward, it may be dismissed by the court and further undermine market confidence in the independence of the Federal Reserve, leading to economic volatility. The market reacted calmly to the threat, but warned that if the lawsuit goes through, it could trigger a constitutional crisis.
Social media users reacted with polarized reactions
On the social media platform ReactionX, users' reactions to Trump's threatened lawsuit were polarized, with supporters and critics engaging in heated debate.
Many Trump supporters praised the move, viewing it as a necessary step to combat the Fed's perceived incompetence. One user commented, "Trump never gives up. He's putting pressure on Powell. Firing him won't be easy, so he's come up with a gimmick. A lawsuit? A genius idea." Another user commented, "Trump's $300 million Fed renovation fabric is crumbling faster than asbestos walls. This 'luxury' project? Just toxic soil remediation and office consolidation. When Powell refuses to yield to a rate cut, it's time for a lawsuit. Powell's real crime is being beyond Trump's control."
Supporters saw it as a bold move, while critics viewed it as a political farce. Key points of discussion included the economic impact and the independence of the Federal Reserve. Overall, the discussion on X reflected the deep divisions in American society over the independence of the Federal Reserve and Trump's economic policies.
"Jerome Sluggish Powell must cut rates now," he wrote, accusing former Treasury Secretary Steven Mnuchin of "digging a big hole" when he recommended Powell in 2017.
Trump further stated that despite trade tensions and geopolitical risks, the U.S. economy has performed well and has overcome the influence of Powell and the Federal Reserve Board. However, he emphasized Powell's "gross incompetence" in the building renovation and considered allowing the lawsuit to move forward.
Trump claimed the renovation project, which should have cost only $50 million, cost $3 billion, calling it "outrageous." The accusation stems from Trump's long-standing criticism of a renovation project at the Federal Reserve's two historic buildings, which aims to repair aging infrastructure, including treating toxic soil and consolidating office functions.
White House spokeswoman Kelly Levitt confirmed at a press conference that Trump was indeed considering the lawsuit, but declined to provide further details.
Neither the Federal Reserve nor Powell himself commented on Trump's post.
The Fed has previously defended the rising cost of the historic building, arguing there were legitimate reasons for the cost, including unexpected contaminants and construction complexities. When Trump visited the site last month, Powell dismissed the $3.1 billion figure, saying, "I've never heard that from anybody."
Trump has for months been bashing Powell, demanding a steep rate cut of several percentage points, saying it would save huge amounts of money.
The Federal Reserve raised interest rates in 2022 to respond to post-epidemic inflation, and gradually lowered interest rates in 2024, but has remained unchanged since 2025, with the benchmark interest rate remaining at 4.25%-4.50%.
Powell said in congressional testimony in July that the Fed would have cut interest rates without the major tariffs.
The Fed in June projected two rate cuts this year, with traders pricing in a quarter-point reduction after its September meeting and further cuts in October and December.
Trump's pressure stems from his dissatisfaction with the Federal Reserve's independence and his belief that rate cuts would offset price increases caused by his tariff policies and reduce the cost of financing government debt.
The event comes as the Federal Reserve faces multiple pressures, including inflation holding steady at 2.7%, slowing economic growth, and economic uncertainty fueled by trade policies promoted by the Trump administration. Market reaction was muted, with the Dow Jones Industrial Average edging slightly higher, reflecting investor concerns about political interference in the Fed.
Low likelihood of successful litigation
Although Trump's threat has attracted widespread attention, legal experts and analysts generally believe that the potential lawsuit is unlikely to succeed, mainly because the Federal Reserve is an independent institution whose decisions are protected by law, and the building renovation project was approved by Congress and there are objective reasons for the cost increase.
While Trump's attack involves "significant litigation," it lacks legal basis because the Fed renovation project is a use of public funds authorized by Congress and Powell is not solely responsible for all decisions. Any attempt by the Trump administration to intervene in the Fed through litigation could face constitutional challenges because the Fed's independence is designed to prevent political manipulation of monetary policy.
Trump and his allies have accused the Fed headquarters reconstruction of mismanagement, but the project's cost rose from $250 million to about $300 million, primarily due to unexpected environmental issues such as toxic soil and construction complexities, not corruption. Any lawsuit would need to prove personal malfeasance by Powell, and the Fed has publicly explained the cost increases and obtained congressional oversight.
Politico previously reported that lawyers within the Trump team had warned of the high legal risks of such actions, including that attempts to fire Powell had been shelved due to legal uncertainty. The report emphasized that federal law protects the Federal Reserve chairman from arbitrary dismissal unless there is "good cause," and building renovations are unlikely to constitute such grounds.
CNN analysis believes that this threat is more of a political gesture aimed at pressuring Powell to cut interest rates rather than a viable legal action. As president, Trump does not have the authority to directly file a lawsuit against Federal Reserve officials and must go through the Department of Justice, which may violate the Federal Reserve's principle of independence.
Historical precedent shows that presidential attempts to intervene in the Fed often fail, such as when political pressure during the Nixon era ultimately led to runaway inflation.
Analysts believe that if the lawsuit goes forward, it may be dismissed by the court and further undermine market confidence in the independence of the Federal Reserve, leading to economic volatility. The market reacted calmly to the threat, but warned that if the lawsuit goes through, it could trigger a constitutional crisis.
Social media users reacted with polarized reactions
On the social media platform ReactionX, users' reactions to Trump's threatened lawsuit were polarized, with supporters and critics engaging in heated debate.
Many Trump supporters praised the move, viewing it as a necessary step to combat the Fed's perceived incompetence. One user commented, "Trump never gives up. He's putting pressure on Powell. Firing him won't be easy, so he's come up with a gimmick. A lawsuit? A genius idea." Another user commented, "Trump's $300 million Fed renovation fabric is crumbling faster than asbestos walls. This 'luxury' project? Just toxic soil remediation and office consolidation. When Powell refuses to yield to a rate cut, it's time for a lawsuit. Powell's real crime is being beyond Trump's control."
Supporters saw it as a bold move, while critics viewed it as a political farce. Key points of discussion included the economic impact and the independence of the Federal Reserve. Overall, the discussion on X reflected the deep divisions in American society over the independence of the Federal Reserve and Trump's economic policies.
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