Trump: Jerome Powell has “been a lousy Fed chairman” as Economic Conflict Reaches Boiling Point1

In a development that has fundamentally reshaped the political and financial landscape of early 2026, President Donald Trump has issued his most stinging rebuke yet of Federal Reserve Chairman Jerome Powell. Speaking from a Ford assembly line in Dearborn, Michigan, on Tuesday, January 13, 2026, the President utilized a high profile interview with CBS Evening News anchor Tony Dokoupil to label the head of the nation’s central bank as a lousy leader. This public condemnation occurs against a backdrop of intensifying legal pressure on the Federal Reserve, a burgeoning scandal involving a multi billion dollar renovation project, and newly released inflation data that reveals the persistent economic squeeze facing American households.

The President’s remarks represent a significant escalation in his long standing campaign to exert more influence over monetary policy. By calling Jerome Powell a lousy Fed chairman, the President is not merely voicing a policy disagreement but is questioning the fundamental competence and integrity of the individual tasked with maintaining the stability of the United States dollar. The timing of this critique is particularly notable as Jerome Powell’s current term as chairman is scheduled to expire in May 2026, sparking widespread speculation about who will lead the central bank in the years to come.

The Dearborn Declaration: A New Low in Fed Relations

During the interview in Dearborn, President Trump expressed a sense of disbelief regarding Powell’s career trajectory. He noted that he was surprised when the previous administration chose to reappoint Powell, stating that the chairman had not earned his stripes in the role. The President’s frustration centers on what he perceives as a lack of urgency in lowering interest rates to stimulate domestic manufacturing and ease the financial burden on consumers.

The President’s rhetoric suggests a desire for a Federal Reserve that is more responsive to executive branch priorities. Throughout his second term, the President has consistently argued that high interest rates are a primary obstacle to his America First economic agenda. By framing Powell’s leadership as lousy, the President is setting the stage for a potentially transformative appointment process this spring, as he seeks a successor who will prioritize growth and industrial expansion over the traditional hawkish approach to inflation management.

The Two Point Five Billion Dollar Renovation Scandal Deepens

Perhaps the most explosive element of the President’s recent criticism involves the massive cost overruns at the Federal Reserve’s Washington headquarters. What began as a 1.9 billion dollar project has spiraled into a 2.5 billion dollar endeavor, drawing the ire of both the White House and fiscal conservatives in Congress. In his interview with Dokoupil, President Trump, drawing on his extensive experience in real estate development, claimed that he could have completed the same renovation for approximately 25 million dollars.

This massive discrepancy has led the President to describe the chairman as either corrupt or incompetent regarding the oversight of the bank’s facilities. The White House argues that such profligate spending on office space is an insult to taxpayers who are struggling with the rising cost of living. The President’s focus on this issue serves a dual purpose: it provides a tangible example of what he calls institutional waste and it provides a legal avenue to challenge Powell’s leadership through Department of Justice investigations.

Department of Justice served Grand Jury Subpoenas to the Fed

The tension between the administration and the central bank has now moved into the realm of criminal law. Last week, the Department of Justice served the Federal Reserve with grand jury subpoenas as part of an investigation into whether Jerome Powell or other officials misled Congress regarding the scope and cost of the renovation projects. This move is unprecedented in the history of the Federal Reserve and has led to a fierce debate over the boundaries of executive oversight and central bank independence.

Jerome Powell has responded to these developments with uncharacteristic public defiance. In a video statement released on the Federal Reserve’s website on Sunday, January 11, 2026, the chairman characterized the investigation as a pretext. He argued that the threat of criminal charges is a direct consequence of the Federal Reserve’s refusal to set interest rates based on the President’s preferences.¹⁶ Powell maintained that the Fed has been transparent with Congress about the challenges faced during the renovation, including unexpected asbestos removal and rising material costs.

December 2025 Inflation Data: The Economic Backdrop

While the political battle rages, the practical economic reality for Americans remains challenging. The Bureau of Labor Statistics released the Consumer Price Index data for December 2025 on Tuesday morning, showing that inflation held firm at 2.7 percent on an annual basis. While this figure was in line with expectations from major Wall Street analysts, it remains stubbornly above the Federal Reserve’s 2 percent target.

The details of the report highlight why many Americans feel the economy is not working for them despite favorable headline numbers. Food prices increased by 0.7 percent in December alone, which marks the fastest monthly growth in over three years. Essential items such as ground beef and coffee have seen double digit price increases over the last twelve months, putting a significant strain on middle class and low income budgets. Housing costs also continued to rise, increasing by 0.4 percent in December and 3.6 percent annually.

Core Inflation and the FOMC Dilemma

Core inflation, which excludes volatile food and energy costs, rose 2.6 percent over the last year. This figure represents a four year low, offering some hope that the underlying inflationary pressures are beginning to subside. However, for the Federal Open Market Committee, the headline rate of 2.7 percent presents a significant challenge. If the Fed cuts interest rates too aggressively in response to political pressure, they risk reigniting inflation. If they remain steady, they face increasing hostility from a White House that is determined to see borrowing costs fall.

The committee is scheduled to meet on January 27 and 28, 2026. This will be the first major policy decision of the new year and will be closely watched for any sign that the Fed is bending to the administration’s will. Investors are currently split on whether the Fed will maintain the status quo or provide a dovish signal to alleviate the political tension.

The Ten Percent Credit Card Cap: Relief for Consumers?

In addition to his attacks on the Federal Reserve, President Trump has announced a bold plan to directly intervene in the credit markets. He has proposed a one year cap on credit card interest rates, set at 10 percent, to take effect on January 20, 2026. This proposal is intended to provide immediate relief to Americans who are currently paying interest rates as high as 30 percent on their credit card balances.

The President has described these high rates as a form of extortion that flourished during previous administrations. His proposal has found unexpected support from across the political spectrum, with figures like Senator Bernie Sanders and Senator Josh Hawley previously introducing similar legislation. However, the banking industry has responded with alarm. In a joint statement, organizations like the American Bankers Association warned that a 10 percent cap would lead to a massive contraction in credit availability, as lenders would no longer be able to offset the risks associated with unsecured debt.

Global Reaction: Central Bankers Stand with Powell

The escalating conflict between the President and the Federal Reserve has triggered a strong response from the international financial community. On January 14, 2026, the heads of several major central banks, including the European Central Bank and the Bank of England, issued a statement of solidarity with Jerome Powell. These leaders emphasized that central bank independence is critical for global financial stability and for maintaining trust in the international monetary system.

The concern among global leaders is that if the United States Federal Reserve loses its independence, it could lead to increased volatility in the currency markets and a loss of confidence in the US dollar as the world’s primary reserve currency. The international community views the DOJ investigation as a dangerous precedent that could be mimicked by other governments around the world, potentially leading to a more politicized global economic environment.

Market Analysis: Investors Grapple with Uncertainty

The stock market has reacted to these developments with increased volatility. On Tuesday, the Dow Jones Industrial Average fell by 400 points as investors processed the combination of firm inflation data and the President’s comments in Dearborn. Market analysts suggest that the uncertainty surrounding the future of the Federal Reserve is weighing heavily on investor sentiment.

The 10 year Treasury yield, a key indicator for mortgage rates and corporate debt, currently sits at approximately 4.18 percent. If the conflict between the White House and the Fed continues to intensify, we could see a flight to safety, leading to lower yields in the short term but potentially higher risk premiums in the long term. Banking stocks have also been under pressure due to the proposed credit card interest rate cap, as investors worry about the impact on future profitability.

Portfolio Management in a Volatile Year

1. Monitor Interest Rate Sensitivity: Investors should evaluate their exposure to sectors that are highly sensitive to interest rate changes, such as technology and real estate.
2. Focus on Essential Commodities: With food prices continuing to rise, companies in the agricultural and staples sectors may offer some protection against persistent inflation.
3. Diversify Currency Exposure: Given the potential for increased dollar volatility, some analysts recommend looking toward international equities or alternative assets.
4. Watch the May 2026 Deadline: The appointment of a new Fed chair will be the single most important event for the financial markets in 2026.

The Path to May 2026: Successor Speculation

As Jerome Powell’s term as chair nears its end, the focus in Washington is shifting toward who might replace him. Several names have been floated in financial circles, including current Fed Governor Christopher Waller and former Council of Economic Advisers Chair Kevin Hassett. The President is likely to seek a candidate who shares his vision for a more growth oriented monetary policy and who is willing to work more closely with the Treasury Department.

The transition period will be a critical time for the US economy. Any perceived lack of continuity could spook the markets, while a radical shift in policy could lead to concerns about long term inflation expectations. The Senate confirmation process for the next chair will likely be one of the most contentious in history, as lawmakers from both parties debate the proper role of the Federal Reserve in a changing global economy.

Detailed Breakdown: The Renovation Scandal vs. Economic Reality

To understand why the President is so focused on the Federal Reserve’s building project, one must look at the specific allegations being made by the administration. The Office of Management and Budget has accused the Fed of an ostentatious renovation project that includes high end finishes and significant structural changes that were not originally authorized. Chairman Powell has countered these claims by pointing out that much of the cost increase was driven by requirements from the U.S. Commission of Fine Arts and the discovery of toxic soil contamination at the site.

The President’s assertion that he could have fixed the buildings for 25 million dollars is viewed by many as a rhetorical tool rather than a literal estimate, but it resonates with a public that is increasingly skeptical of government spending. By tying the renovation costs to Powell’s general performance as a lousy chairman, the President is making the case that the Fed is out of touch with the financial struggles of the average American citizen.

Legislative Hurdles for the Credit Card Cap

While the 10 percent credit card cap has significant popular appeal, its implementation is far from guaranteed. Implementing such a cap would likely require an act of Congress, and while there is bipartisan interest, the banking lobby remains a formidable opponent. Critics argue that the cap would force banks to cancel millions of credit cards for higher risk individuals, effectively pushing them toward payday lenders and other less regulated forms of credit. This debate will likely dominate the legislative agenda in the first half of 2026.

Final Outlook for January 2026

As of January 14, 2026, the United States economy is at a crossroads. The conflict between the President and the Federal Reserve is more than a personality clash; it is a fundamental debate about the future of American economic governance. With inflation remaining above target and a criminal investigation hanging over the head of the central bank, the coming months will be defined by uncertainty and intense political maneuvering.