Criticism Over Rates and Renovation Costs
US President Donald Trump has suggested he might let a lawsuit proceed against Federal Reserve Chairman Jerome Powell, citing supposed mismanagement and overspending in the refurbishment of the central bank headquarters. In a Tuesday social media post, Trump blamed Powell for performing a “grossly incompetent” job with the project and reiterated his wider criticism of the Fed for leaving interest rates steady.
The harm he has caused by constantly showing up too late is incalculable,” Trump wrote, noting that the economy is strong enough to survive Powell’s moves. He said the cost of renovating had spiralled to $3.1 billion a total Powell has challenged previously.
Trump did not name the lawsuit he was referring to, but his remarks are the latest in an ongoing battle with the Fed chair stretching back over a year.
Tariffs, Inflation, and Pressure for Rate Cuts
Trump has consistently called for the cutting of interest rates by Powell, contending that the US economy would be aided by lower borrowing costs. Policymakers have maintained rates since the Fed’s most recent rate reduction in December while keeping a watch on the economic effects of Trump’s tariffs on international trade.
The president insists that inflation is still under control and cites government data released Tuesday that indicate consumer prices remained flat at 2.7% in July. Hours after the release, Trump once again urged Powell to lower the rates, declaring that it was now imperative to maintain the economy’s pace.
Economists are still at odds on whether Trump’s most recent tariffs will have a short- or long-term impact on inflation. The Fed, meanwhile, has claimed that policy-making needs to be approached carefully, taking into account both existing data and future threats.
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A Dispute Over Billions
The battle over the renovation of the Fed building has become a rallying cry in Trump’s criticism of Powell. While Trump estimates the makeover at $3.1 billion, Powell estimates the actual cost at $2.5 billion, pointing out that Trump’s figure tacks on costs from a different, already completed building project.
The spat over the price tag has raised speculation about whether Trump could attempt to oust Powell before his term expires something unprecedented in recent Fed history.
For the time being, the likelihood of a lawsuit is uncertain. But Trump’s sharp comments indicate that tensions between the Federal Reserve and White House are hardly dying down, particularly as economic policy and political competition increasingly combine in the run-up to the next election cycle.
