Trump Considers Legal Action Against Fed Chair Powell Amid Rate Cut Demands

• Trump is considering suing Fed Chair Powell over excessive renovation costs and demands for rate cuts.

• July inflation dropped to 2.7%, and Trump says this proves that rates should be lowered immediately.

• Trump’s Fed nominee supports the president and claims tariffs have not caused inflation.

President Donald Trump announced he is contemplating legal action against Federal Reserve Chair Jerome Powell while demanding immediate interest rate cuts following July’s Consumer Price Index data release. The president criticized Powell’s handling of Federal Reserve building renovations and his monetary policy decisions.

In a Truth Social post, Trump stated he may allow a major lawsuit against Powell to proceed over Federal Reserve renovation costs. The president accused Powell of performing a “horrible and grossly incompetent job” in managing construction projects at Fed facilities.

Trump highlighted the excessive spending on renovations, claiming $3 billion was allocated for work that should have cost $50 million. Powell previously faced criminal referral to the Department of Justice for perjury related to these renovation expenses, adding pressure to his position as Fed Chair.

CPI Data Fuels Rate Cut Demands

The July CPI data showed inflation at 2.7% year-over-year, below the expected 2.8%. Monthly CPI decreased to 0.2% from the previous month’s 0.3%. These figures provided Trump with ammunition for his rate cut arguments.

Trump declared that Powell must lower interest rates immediately. He blamed the Fed Chair for causing “incalculable” damage by being consistently “too late” with policy decisions. The president argued that the strong economy has succeeded despite Powell’s leadership rather than because of it.

The inflation data suggest Trump’s tariff policies have not significantly impacted consumer prices, contrary to Federal Reserve expectations. Powell had previously insisted on waiting to assess tariff effects on inflation before implementing rate cuts.

Trump defended his tariff strategy in another social media post. He claimed tariffs have not caused inflation and emphasized that substantial cash flows are entering the United States. The president maintained that consumers are not bearing the cost of tariffs.

Fed Board Nominee Supports President’s Position

During a CNBC interview, Stephen Miran, Trump’s nominee for the Federal Reserve Board, expressed satisfaction with the July CPI data. Miran described inflation as “well behaved” and noted the absence of aggregate inflation evidence.

Miran praised the accuracy of CPI data compared to employment reports, highlighting that consumer price figures rarely require revisions. He calculated that CPI inflation has averaged 1.9% annually since Trump’s inauguration, characterizing this as typical economic performance.

The Fed Board nominee reinforced Trump’s position on tariffs, stating there is no evidence of tariff-induced inflation. This statement aligns with the administration’s broader economic messaging and supports arguments for immediate monetary policy changes.

Trump’s dual approach of threatening legal action while demanding policy changes represents escalating pressure on the Federal Reserve. The favorable inflation data and political pressure may influence the Fed’s upcoming interest rate decisions.