Reviewed by Gotrade Internal Analyst
Jakarta, Gotrade News - US President Donald Trump is stirring the pot again, threatening a lawsuit against Fed Chair Jerome Powell. This move could shake monetary policy stability just as investors are looking for clues on 2026 interest rates.
Key Takeaways
- Trump plans to announce a new Fed chair nominee in January amid threats to fire Powell.
- A lawsuit over "gross incompetence" is being considered regarding the Fed's building renovation project.
- This tension amplifies market volatility risks due to sharp disagreements over rate cuts.
According to Seeking Alpha, Trump stated he would "probably" sue Powell for "gross incompetence." The issue is allegedly linked to budget overruns in the central bank's headquarters renovation.
Trump also emphasized to The Japan Times that the option to fire Powell before his term ends is still on the table. He admitted he'd "love to fire him," though financial markets reacted negatively back in July.
The announcement for Powell's replacement is scheduled for January, with big names entering the candidate pool. One finalist mentioned in reports is Rick Rieder from BlackRock, Inc..
This conflict highlights a clash in economic vision, where Trump pushes for much more aggressive rate cuts. In contrast, Fed officials are signaling potentially just one cut in 2026.
Powell's term as chair ends in May 2026, but he holds a board seat until 2028. Trump has openly urged Powell to resign completely from the board once his chairmanship concludes.
If Powell stays on the board, Trump loses the chance to appoint a new member aligned with his vision. This creates fresh uncertainty for investors banking on the US central bank's independence.
Reference:
- Seeking Alpha, Trump threatens to sue Fed's Powell for 'gross incompetence'. Accessed on December 30, 2025
- The Japan Times, Trump says he still might fire Powell as Fed chair pick looms. Accessed on December 30, 2025
- Featured Image: Shutterstock
Disclaimer
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