U.S. President Donald Trump launched sharp criticisms against Federal Reserve Chair Jerome Powell, threatening to file a major lawsuit against him over what he described as the 'disastrous management' of the renovation project for the Fed's headquarters, which cost over $2.5 billion, despite the possibility of completing it — according to him — for only $50 million.

Trump, who did not hesitate to describe Powell as a 'loser' and 'always late', also opened fire on former Treasury Secretary Steven Mnuchin, considering that his recommendation to appoint Powell in 2017 was a grave mistake that gave the Fed an untrustworthy leadership.

The attack came immediately after the release of July's inflation data, which showed a year-on-year increase of 2.7%, a rate that exceeds the target of 2%, but is much lower than the peak of 9.1% witnessed by the U.S. economy in June 2022.

Trump believes that Powell's refusal to cut interest rates throughout 2025 may be politically motivated, especially since the latter made three cuts last year, two of them just before the elections, a move that sparked widespread controversy at the time. Powell, however, justified his stance by citing the unclear impact of the tariffs imposed by the Trump administration on inflation rates.

Trump did not stop at criticizing monetary policy but also directly accused Powell of squandering public funds on the renovation project, pointing to costly and unnecessary changes, such as adding underground floors and parking lots beneath historic buildings, in modifications he considered a 'massive waste of resources'. While some Republicans see these changes as potentially violating planning laws, Powell confirmed that the modifications were minor and did not require reporting.

Despite the harsh statements, Trump clarified that he does not plan to dismiss Powell before the end of his term in May 2026, but emphasized that if the latter refuses to resign, he will appoint a replacement who will immediately decide to cut interest rates by more than two percentage points.

This escalation reflects the depth of the rift between the U.S. administration and the Federal Reserve, placing monetary policy at the heart of political controversy, with global markets anticipating the outcome of the Fed's upcoming meeting on September 16, which could be a pivotal moment in this conflict.

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