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Trump threatens Fed Chairman Powell and may face "major lawsuits"
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: Trump threatens Federal Reserve Chairman Powell and may face "major lawsuits". Hope it will be helpful to you! The original content is as follows:
On Tuesday (August 12), US President Trump posted on the TruthSocial platform, threatening to allow the "major lawsuit" against Federal Reserve Chairman Jerome Powell to advance, while again putting pressure on an immediate interest rate cut to reduce government borrowing costs. Trump said in a post that the potential lawsuit involved Powell's management of the renovation project of the Federal Reserve's Washington headquarters building, which he criticized for soaring from the initial $50 million to more than $3 billion.
He wrote: "Jerome Slow Powell must cut interest rates now." He accused former Treasury Secretary Steven Mnuchin of "diging a big hole" when he recommended Powell in 2017.
Trump further stated that despite trade tensions and geopolitical risks, the U.S. economy has performed well and has overcome the impact of Powell and the Fed's board of directors. But he stressed Powell's "serious incompetence" in building renovation and considered allowing the lawsuit to move forward.
Trump claimed that the renovation was supposed to cost only $50 million, but it cost $3 billion, saying it was "too outrageous." The allegations stem from Trump’s long-standing criticism of two historic building renovation projects at the Federal Reserve Headquarters, which aims to repair aging infrastructure, including handling toxic soils and integrating office functions.
White House spokesman Kelly Levitt confirmed at a press conference that Trump is indeed considering the lawsuit, but refused to provide further details.
Neither the Federal Reserve nor Powell himself www.xmh100.commented on Trump's post.
The Fed previously defended that there are reasonable reasons for the rising cost of renovation of the historic building, including the unexpected discovery of pollutants and building www.xmh100.complexity. Trump participated last monthDuring the scene, Powell denied the $3.1 billion figure, saying "I have never heard of this number from anyone."
For months, Trump has continued to criticize Powell, demanding a sharp cut of several percentage points, saying it will save huge money.
The Federal Reserve raised interest rates in 2022 to deal with post-epidemic inflation and gradually cut interest rates in 2024, but it has remained unchanged since 2025, with the benchmark interest rate remaining at 4.25%-4.50%.
Powell said in his July Congressional testimony that if there is no major tariff policy, the Federal Reserve will have cut interest rates.
The Federal Reserve expects to cut interest rates twice this year in June, with traders expecting a 25 basis point drop after September meetings, and further cuts in October and December.
Trump's pressure stems from his dissatisfaction with the independence of the Federal Reserve, who believes that interest rate cuts can offset the price increase brought by his tariff policies and reduce the cost of financing for government debt.
This incident happened against the backdrop of multiple pressures from the Federal Reserve, including inflation stabilized at 2.7%, slowing economic growth, and the potential economic uncertainty caused by trade policies promoted by the Trump administration. The market response was moderate, with the Dow Jones volatility slightly, reflecting investors' concerns about political interference in the Fed.
The probability of success of the lawsuit is low
Although Trump's threat has attracted widespread attention, legal experts and analysts generally believe that the possibility of success of this potential lawsuit is extremely low, mainly because the Federal Reserve, as an independent agency, its decisions are protected by law, and the building renovation project is approved by Congress, and there are objective reasons for the rising costs.
Although Trump's attack involves "major lawsuits", it lacks a legal basis because the Fed's renovation project is a public fund authorized by Congress, and Powell is not personally responsible for all decisions. The Trump administration's attempt to interfere with the Fed through litigation may face constitutional challenges because the Fed's independence is designed to prevent political manipulation of monetary policy.
Trump and his allies accused the Fed's headquarters of improper management, but the project costs rose from $250 million to about $300 million, mainly due to unexpected environmental problems such as toxic soil and building www.xmh100.complexity rather than corruption. Any lawsuit requires evidence of Powell's personal malfeasance, and the Fed has publicly explained the cost has risen and has received congressional oversight.
Politico previously reported that lawyers within Trump's team had warned that similar actions were at high legal risks, including efforts to fire Powell were put on hold due to legal uncertainty. The report stressed that federal law protects the Federal Reserve chairman from arbitrary dismissal unless there are "justified reasons" and building renovations are difficult to constitute such reasons.
www.xmh100.comN analysis believes that this threat is more of a political gesture, aiming to pressure Powell to cut interest rates rather than feasible legal actions. As president, Trump has no right to file a lawsuit against Fed officials directly and needs to pass the Justice Department, but this may violate the Federal Reserve's principle of independence.
Historical precedents show that presidential attempts to interfere in the Fed often fail, such as the political pressure in the Nixon era that eventually leads to out-of-control inflation.
Analysts believe that if the lawsuit is advanced, it may be rejected by the court and further damage the market's confidence in the independence of the Federal Reserve and lead to economic fluctuations. The market responded calmly to the threat, but warned that if the lawsuit came true, it could trigger a constitutional crisis.
Social media user responses polarized
On the social media X platform, users' responses to Trump's threatening lawsuits were polarized, and supporters and critics had a fierce debate.
Many Trump supporters praised his actions and regarded them as necessary steps to www.xmh100.combat the Fed's "incompetence". One user said: "Trump never gives up. He is putting pressure on Powell and it is not easy to fire him, so he came up with a trick. Litigation? The idea of a genius." Some users also said: "Trump's $300 million Fed renovation fiction collapsed faster than the asbestos wall. The 'luxury' project? It's just toxic soil repair and office integration. When Powell refused to succumb to rate cuts, it was time for the lawsuit. Powell's real crime was beyond Trump's control."
Supporters regarded it as a bold move, critics regarded it as a political farce, and the focus of discussion included economic impact and Fed independence. Overall, the discussion on X reflects deep differences in American society over Fed independence and Trump’s economic policies.
The above content is all about "[XM Foreign Exchange Decision Analysis]: Trump threatens Federal Reserve Chairman Powell and may face "major lawsuits". It is carefully www.xmh100.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your transactions! Thanks for the support!
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