See you in court! Trump targets Fed Chair Jerome Powell with massive lawsuit threat

Economic Times

4 days ago

Donald Trump lawsuit Jerome Powell: Donald Trump is threatening a lawsuit against Federal Reserve Chair Jerome Powell over a $3 billion renovation project he deems "horrible and grossly incompetent." Trump claims the project should have cost only $50 million. He also reiterated his demand for Powell to cut interest rates immediately, despite concerns about rising core inflation.
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Donald Trump Threatens Lawsuit Against Jerome Powell Over Fed's $3 Billion Renovation
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US president Donald Trump is once again turning up the heat on Federal Reserve Chair Jerome Powell, this time threatening a major lawsuit over what he calls a "horrible and grossly incompetent" handling of a costly renovation project at the Fed's Washington headquarters, as per a report.Trump wrote on his social media site Truth Social, saying that he is "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," as quoted by Newsweek.He pointed out that, "Three Billion Dollars for a job that should have been a $50 Million Dollar fix up. Not good!," but he did not give any details about the lawsuit to which he was referring, as per the Newsweek report.ALSO READ: AI upstart Perplexity shocks tech world with $34.5 billion bid to snatch Google Chrome The Federal Reserve, however, has pointed to a range of unforeseen issues as reasons for the ballooning costs, including the discovery of more asbestos than initially known, toxic soil contamination, and redesigns that were necessary as the project evolved, according to the report. The Fed also highlighted that the modernisation project will ultimately save money by consolidating most of its operations, as per the Newsweek report.The Fed chair and US president have previously clashed over this during Trump's visit to the Fed construction project in July, when Powell disputed his characterisation of the costs involved, as reported by Newsweek.ALSO READ: Is it AI or Trump's policies? US sees brutal 140% layoff spike in July, worst surge since early COVID chaos Trump also repeated his demand for Powell to cut interest rates in his Truth Social post after the publication of the most recent inflation data, according to the report.The headline rate of CPI inflation held steady at 2.7% in July, while the underlying rate of core inflation, which strips out volatile food and energy prices, rose to 3.1% in the month, increasing from 2.9% in June, as per the Newsweek report.Meanwhile, the US central bank has held off cutting rates due to concerns that Trump's tariffs may fuel an increase in inflation, and has been waiting for more data before making a move, according to the report. But markets now expect a September rate cut, as inflation is fairly stable and jobs data is weakening, reported Newsweek.Trump wrote that "Jerome 'Too Late' Powell must NOW lower the rate," and also called the Fed chair a "loser," as per the report.The US president highlighted that "The damage he has done by always being Too Late is incalculable. Fortunately, the economy is sooo good that we've blown through Powell and the complacent Board," as quoted im the Newsweek report.However, some experts have warned that the rising core inflation data is a red flag, like Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, wrote on X that "CPI was in line with expectations, but the trend is heading in the wrong direction," adding, "It may not prevent a rate cut by the Fed in September, because policy is 'restrictive' but progress toward 2% inflation appears to have stalled," as quoted in the report.Trump believes the Federal Reserve's $3 billion renovation project has been mismanaged and cost far more than necessary.Markets expect a rate cut in September, but it depends on inflation and job market data, as per the Newsweek report.