Potential Legal Action Against Jerome Powell by Donald Trump
In a recent turn of events, American President Donald Trump has threatened to take legal action against Jerome Powell, the Federal Reserve Chair, over the Fed's $3 billion headquarters renovation costs. This move comes alongside Trump's repeated criticisms of Powell for maintaining high interest rates, which Trump claims are harming the housing industry by making mortgages unaffordable.
The timeline of these events centers around August 2025, with Trump's social media attacks occurring in the week leading up to Powell's speech at the Jackson Hole symposium on August 22, 2025. Trump's criticisms included calling Powell "Too Late" for not cutting interest rates sooner, despite inflation remaining above the Fed's target. Trump made these accusations publicly via his Truth Social platform.
Stephen Miran, Trump's pick for the Fed council, has stated that there is no evidence of global inflation and that the Consumer Price Index (CPI) figures are reliable. This statement was made in response to Trump's claims about the impact of high interest rates on the economy.
The dispute between Trump and Powell over interest rates and renovation costs is ongoing. Last month, Trump visited the Fed headquarters to inspect the ongoing work and call for a reduction in rates. Trump considers these renovation costs excessive and wasteful, and sees Powell's management of these costs as incompetent.
Despite Trump's threats, there is no indication from the available information that his actions have caused any immediate change in Federal Reserve policy. The Fed was continuing to assess economic data such as the consumer price index (CPI), which rose 0.2% in July 2025, indicating persistent inflationary pressures. The Fed's policymakers remained cautious and did not announce rate cuts at that time.
In a nod to the strength of the American economy, Trump acknowledged that tariffs have not caused inflation. However, he continues to pressure Powell to lower interest rates, claiming that the delay in doing so is causing "incalculable" damage.
This dispute over renovation costs is one of the ways Powell has faced pressure from Trump. As the Jackson Hole symposium approaches, the focus remains on whether Powell will yield to Trump's demands and what impact, if any, this will have on the Federal Reserve's interest rate policy.
[1] Source: Financial Times, August 15, 2025.
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