Former President Donald Trump has announced that he is considering legal action against Powell, citing allegations of incompetence.

Potential Legal Action

Trump's announcement centers on his consideration of a lawsuit against Powell. The former president explicitly stated that the potential legal action would be based on claims of incompetence.

Key Details

Significance of the Announcement

This statement marks a notable development in the ongoing tensions between Trump and Powell. The public nature of the announcement and the specific mention of legal proceedings suggest a significant escalation in their relationship.

The use of the term "incompetence" as the basis for potential legal action indicates the serious nature of Trump's concerns. However, the statement remains at the consideration stage, with no definitive commitment to proceed with an actual legal filing at this time.

As the situation develops, it remains to be seen whether Trump will follow through with the lawsuit or if this announcement will lead to other consequences in their professional relationship.

President Trump has escalated his criticism of Federal Reserve Chair Jerome Powell, stating he might still fire the current Fed leader while maintaining his January timeline for announcing Powell's replacement. Speaking at a press conference at his Mar-a-Lago resort, Trump declared that Powell "should resign" and expressed his desire to remove him from the position.

Firing Threats and Leadership Uncertainty

Trump's latest comments represent a significant escalation from his previous stance, with the president now openly considering Powell's dismissal. "Maybe I still might," Trump told reporters when asked about firing Powell, referencing his earlier consideration of Powell's ouster in July, which he abandoned after negative financial market reactions.

January Announcement Timeline Maintained

Despite the firing threats, Trump confirmed he maintains a preferred candidate for Fed Chair and will announce the selection "January sometime." The president indicated his choice "hasn't changed" but emphasized there's "plenty of time" for the announcement. This timeline allows for strategic positioning while keeping financial markets in uncertainty about Powell's immediate future.

Candidate Selection Process

Trump has not specified his leading chair candidate, though National Economic Council Director Kevin Hassett has been viewed as the frontrunner. Other potential candidates include former Fed governor Kevin Warsh, current Fed governors Christopher Waller and Michelle Bowman, and BlackRock's Rick Rieder. The president's decision-making process has featured contradictory statements, previously claiming he'd narrowed the pool to one candidate before indicating multiple contenders remain under consideration.

Policy Disagreements and Legal Threats

Trump's criticism centers on Powell's interest rate policy, with the president seeking more aggressive rate cuts to lower mortgage costs. While the Federal Reserve has reduced rates at its last three meetings, officials signaled only one rate cut likely in 2026. Trump announced he's considering a "gross incompetence" lawsuit against Powell related to an ongoing Fed renovation project, adding legal pressure to the leadership dispute.

Market and Economic Implications

The uncertainty surrounding Powell's position creates potential volatility for financial markets, particularly given Trump's previous retreat from firing Powell due to negative market reactions. Powell's decision to remain on the Fed Board through 2028, even if his chair term ends, would limit Trump's ability to reshape Fed leadership completely.