President Donald Trump and Federal Reserve Chair Jerome Powell. (Photo: Reuters)

On Tuesday, August 12, President Donald Trump threatened to pursue a “major lawsuit” against Federal Reserve Chair Jerome Powell, intensifying pressure on the central bank chief to cut current interest rates.

In a post on Truth Social, Trump said the lawsuit would target Powell’s handling of costly renovations at the Fed’s Washington, D.C. headquarters something the president has criticized before. However, Trump did not specify when such a lawsuit might be filed or by whom.

“Steve ‘Manouychin’ really did me a ‘favor’ when he pushed this loser,” Trump wrote, referring to his first-term Treasury Secretary Steven Mnuchin, who encouraged him to nominate Powell as Fed Chair in 2017. “The damage he’s caused by always acting too late is immeasurable. Thankfully, the economy is doing so well that we’ve sidelined Powell and the complacent Board of Governors,” he said.

“Still, I’m considering allowing a major lawsuit against Powell for the terrible and extremely incompetent job he’s done overseeing the Federal Building project three billion dollars for something that should have cost $50 million to fix. Not good!” Trump said.

White House Press Secretary Karoline Leavitt declined to elaborate on the potential lawsuit when pressed on Tuesday. “He is considering legal action, and I’m not going to comment further. I’ll leave that to the president,” Leavitt stated.

The Fed declined to comment on Trump’s post. Powell and the Fed have previously defended the ongoing renovations of the central bank’s two historic D.C. buildings, explaining the reasons behind rising costs during the project.

Last month, Powell pushed back sharply after Trump visited the construction site and claimed renovation costs had surpassed $3.1 billion. “I’ve never heard anyone say that,” Powell responded.

Trump has been attacking Powell for months, urging the central bank to slash interest rates by several percentage points. He argues that doing so would save the U.S. a significant amount by lowering borrowing costs for government operations.

After raising the benchmark federal funds rate in 2022 in response to the Covid-19 pandemic, the Fed gradually cut rates several times in 2024, the final year of President Joe Biden’s term. But so far in 2025, rates have held steady despite Trump’s demands.

In July congressional testimony, Powell said the Fed would have cut rates this year if Trump had not implemented his sweeping tariff policy. In June, Fed officials indicated they expected two rate cuts in 2025.

Currently, traders anticipate a 0.25 percentage point cut following the Federal Open Market Committee’s (FOMC) September meeting. Expectations for additional rate cuts have grown after the FOMC’s October and December sessions.

(Cre: CNBC)