Trump Threatens Powell with Lawsuit Over Interest Rates in 2025: A $3 Billion Feud Escalates
- Why Is Trump Threatening Jerome Powell with a Lawsuit?
- How Has the Fed Responded to Trump’s Pressure?
- Who’s on Trump’s Shortlist to Replace Powell?
- What’s the Bigger Picture Behind This Feud?
- Could This Legal Threat Actually Work?
- FAQ: Your Trump-Powell Feud Questions Answered
Former President Donald TRUMP has escalated his long-running battle with Federal Reserve Chair Jerome Powell, threatening legal action over what he calls "out-of-control" spending on Fed renovations and demanding immediate interest rate cuts. The feud, now tied to a $3 billion construction project, highlights Trump's push to influence monetary policy as his administration quietly scouts Powell's potential replacements. Here’s the full breakdown of this high-stakes financial drama.
Why Is Trump Threatening Jerome Powell with a Lawsuit?
In a fiery Truth Social post on August 12, 2025, Trump linked a potential lawsuit against Powell directly to the Fed’s refusal to cut interest rates. He accused Powell of turning a proposed $50 million refurbishment of the Federal Reserve’s historic buildings into a $3 billion "construction disaster," labeling the chair "Too Late" for his slow response to economic pressures. Trump’s post included a swipe at his former Treasury Secretary, Steven Mnuchin, for originally recommending Powell in 2017: "Steve ‘Manouychin’ really gave me a beauty when he pushed this loser."
How Has the Fed Responded to Trump’s Pressure?
The Federal Reserve has held rates steady throughout 2025 despite Trump’s demands, following multiple cuts in 2024 under President Biden. In July 2025 testimony, Powell hinted that Trump’s tariff policies had complicated the Fed’s ability to ease monetary policy. The Fed also defended its renovation costs, citing modernization needs and strict preservation rules. When Trump confronted Powell at the construction site last month, claiming costs had ballooned to $3.1 billion, Powell shot back: "I haven’t heard that from anybody."
Who’s on Trump’s Shortlist to Replace Powell?
With Powell’s term ending in 2026, the Trump administration is reportedly vetting candidates including Fed Vice Chairs Philip Jefferson and Michelle Bowman, Dallas Fed President Lorie Logan, and former St. Louis Fed President Jim Bullard. Private-sector figures like macroeconomic consultant Marc Sumerlin are also in the mix. The challenge? Finding a chair who can balance Trump’s demand for rapid rate cuts with the Fed’s need to maintain credibility in fighting inflation—a near-impossible tightrope walk.
What’s the Bigger Picture Behind This Feud?
This isn’t just about interest rates or construction budgets—it’s a power struggle over the Fed’s independence. Trump has framed the renovation costs as symbolic of government waste, while economists warn that politicizing rate decisions could destabilize markets. As one BTCC analyst noted, "When central banks lose autonomy, currencies often pay the price." The Fed’s next moves will test whether it can withstand presidential pressure while navigating a fragile global economy.
Could This Legal Threat Actually Work?
Legal experts are skeptical. While Trump could theoretically sue over procurement processes, the Fed’s independence in monetary policy is legally protected. What’s clearer is the market impact: uncertainty around Fed leadership and rate policy has already contributed to volatility in Treasury yields and the dollar index (per TradingView data). As the 2026 chair decision looms, Wall Street is bracing for more turbulence.
FAQ: Your Trump-Powell Feud Questions Answered
What exactly is Trump accusing Powell of?
Trump claims Powell mismanaged the Fed’s building renovations, allowing costs to spiral from $50 million to $3 billion, while also delaying necessary rate cuts.
Has the Fed ever faced this kind of presidential pressure before?
While past presidents have occasionally criticized the Fed, Trump’s combination of public attacks, legal threats, and replacement planning is unprecedented in modern Fed history.
When will Powell’s term end?
Powell’s current term as chair expires in February 2026, though he could remain on the Board of Governors until 2028.
