President Donald Trump is once again in the headlines for his tense relationship with Federal Reserve Chair Jerome Powell.
This time, the potential flashpoint is a “major lawsuit” that Trump says he may allow to proceed against Powell, focusing on the management of the Federal Reserve’s multibillion-dollar headquarters renovation in Washington, D.C.
A Lawsuit on the Horizon? The Dispute Over the Fed’s Renovation
According to the White House, Trump’s consideration follows months of frustration over what he calls “grossly incompetent” oversight of the project’s cost and scope.
While the Fed has defended the renovations as necessary for updating and preserving historic buildings, Trump argues the work should have cost a fraction of the current $3 billion-plus bill.
The prospect of legal action comes against the backdrop of Trump’s broader pressure campaign on Powell to lower interest rates, and could further intensify a long-running and unusually public feud between the president and the central bank chief.
Trump’s threat of legal action stems from his sharp criticism of the renovation costs for the Federal Reserve’s historic headquarters. The president claims the project, which has been in the works for years, should have cost about $50 million, not the more than $3 billion currently projected.
On social media, he described Powell’s management of the construction as “horrible” and “grossly incompetent,” suggesting that such mismanagement could justify a “for cause” dismissal, one of the few legal routes to removing a Senate-confirmed Fed chair before the end of their term.
The White House press secretary, Karoline Leavitt, confirmed that Trump is considering a lawsuit but did not elaborate on the legal strategy or timing.
The Fed, for its part, has declined to comment on the matter, though it has previously defended the renovations as necessary to preserve the historic integrity of the buildings and modernise their facilities.
Cost increases, according to Fed statements, have been driven by structural updates, compliance with safety standards, and the complexity of working within heritage-listed structures.
Tensions over the renovation have been brewing for months. In July, Trump and Powell toured the site together, with the president appearing to acknowledge the scale of the undertaking at the time.
However, Trump’s tone shifted sharply in subsequent weeks, framing the project as evidence of Powell’s poor judgment and wasteful spending.
This focus on the renovation also intersects with Trump’s broader dissatisfaction with Powell over monetary policy, specifically the Fed’s refusal so far in 2025 to deliver the steep interest rate cuts the president has demanded.
While it remains unclear whether Trump will move forward with the lawsuit, its potential filing would raise significant legal questions.
Any case that seeks to remove Powell on grounds of mismanagement could quickly escalate to the Supreme Court, testing the limits of presidential authority over an independent central bank.
Politics, Policy, and Personalities Collide
Trump and Powell’s strained relationship has been a recurring theme since Powell’s appointment in 2018. Initially nominated by Trump to replace Janet Yellen, Powell soon became a target of the president’s ire over what Trump saw as slow and insufficient interest rate cuts.
Trump has publicly accused Powell of being “too late” on policy decisions and has repeatedly linked monetary policy to his political and economic objectives.
The dispute over the renovation project offers Trump a new front in this ongoing battle. By framing the cost overruns as evidence of mismanagement, the president appears to be exploring a politically advantageous argument that combines fiscal prudence with personal accountability.
This narrative also dovetails with Republican efforts in Congress, such as Rep. Anna Paulina Luna’s push for an investigation into Powell’s testimony about the renovations, alleging that he provided misleading information to lawmakers.
The political stakes are high. Trump has already stated that he will announce his choice for Powell’s successor months earlier than is customary, with names such as former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, and Fed Governor Christopher Waller reportedly under consideration.
His recent nomination of Stephen Miran to the Fed’s Board of Governors could also signal an effort to shape the central bank’s future direction before Powell’s term ends in May.
Monetary policy remains at the heart of this tension. Despite market expectations of rate cuts later in the year, the Fed has so far held its benchmark rate steady in 2025.
Powell has argued that Trump’s own tariff policies have complicated the case for cuts, citing their inflationary effects. Trump, meanwhile, has suggested that lower rates would save the U.S. government vast sums in borrowing costs.
If Trump’s legal and political pressure succeeds in reshaping the Fed’s leadership, it could have far-reaching implications for monetary policy, investor confidence, and the perceived independence of the central bank.
Conversely, an unsuccessful challenge might reinforce the Fed’s institutional resilience but deepen the personal animosity between Trump and Powell.
Conclusion
Trump’s consideration of a lawsuit against Jerome Powell marks a significant escalation in their long-standing feud, blending political theatre with genuine policy disputes.
By focusing on the cost of the Fed’s headquarters renovation, Trump is attempting to frame Powell’s leadership as financially reckless while advancing his broader agenda for lower interest rates.
Whether this leads to a courtroom battle, a political reshuffle, or simply more heated rhetoric remains to be seen.
What is certain is that the outcome will shape not only the future of Powell’s tenure but also the broader debate over the Federal Reserve’s independence and its role in managing the U.S. economy.