Trump mulls lawsuit against Fed’s Powell over costly headquarters renovation

US President Donald Trump is weighing a lawsuit against Federal Reserve Chair Jerome Powell, accusing him of gross mismanagement in a multi-billion-dollar renovation of the central bank’s Washington headquarters. The move marks a new escalation in Trump’s pressure campaign on the Fed to cut interest rates, according to Reuters.

White House flags renovation cost overruns

White House spokeswoman Karoline Leavitt confirmed on August 12 that the administration is investigating the renovation of two historic Federal Reserve buildings. Officials allege poor oversight, inflated expenses, and unnecessary luxury additions have driven costs far above initial estimates.

When the project began, the Fed expected it to cost $1.9 billion. Updated figures now put the budget at $2.4 billion, a nearly $500 million increase. The central bank says this is due to higher labour and materials costs, asbestos abatement, and other unforeseen construction challenges, as per Fed documents cited by Reuters.

Trump personally toured the site last month, a rare presidential visit to the Fed, and repeated his accusations directly to Powell. He also used the meeting to push for rate cuts.

Trump’s social media blast

On Truth Social, Trump referred to Powell as “Jerome ‘Too Late’ Powell” and renewed his call for immediate rate cuts. He accused Powell of overseeing “a horrible, and grossly incompetent” construction job that ballooned into a “three billion dollar” project when it should have been a $50 million fix.

“Fortunately, the economy is sooo good that we’ve blown through Powell and the complacent Board,” Trump wrote. “I am considering allowing a major lawsuit against Powell to proceed.”

The White House has not confirmed which specific lawsuit Trump was referring to, but Bloomberg reports the statement appears linked to ongoing legal reviews of the renovation contracts.

Legal and policy backdrop

While presidents cannot remove a Fed chair over policy disagreements, per a recent Supreme Court opinion,Trump’s legal team appears to be exploring alternative channels, such as potential negligence or fraud claims tied to the construction. The dispute comes as Trump seeks aggressive rate cuts ahead of the Fed’s September 16–17 policy meeting. Market bets now suggest an 85% probability of a rate cut, according to Reuters, after data showed core US inflation edged higher in July but goods prices rose more slowly, tempering tariff-driven price pressures.

Trump has argued that lower rates would reduce the federal government’s debt servicing costs, even as he insists the economy is strong thanks to his tax, trade, and immigration policies. The Federal Reserve’s headquarters renovation, initially set at $1.9 billion, aimed to modernise two historic Washington buildings while preserving architectural heritage. However, by 2025, the projected cost has surged to $2.4 billion. The Fed attributes this to market-driven labour and material price hikes, unexpected asbestos removal, and logistical challenges inherent in working with protected structures.

Trump’s estimate of $50 million that reflects what he claims would have been sufficient for a “basic fix-up,” suggesting the bulk of the spending is excessive. His “$3 billion” figure, while not reflected in official Fed numbers, underscores his accusation of waste and mismanagement. These competing narratives form the core of the legal and political battle over the project’s legitimacy.

(With inputs from the agencies)