Donald Trump says Fed has 'gone crazy' after Dow Industrial Average tumbles

12 Octubre, 2018, 01:57 | Author: Arnold Perez
  • US stocks have plunged to their worst loss in eight months

In a brief interaction with reporters and later in comments to Fox News, Trump said the USA central bank was "too aggressive" in raising interest rates.

"The Fed has an independence that it needs to pursue, it's concerned about inflation - and right now we have tariffs, which are wreaking havoc, we're not sure to what extent, and an exploding deficit ..."

President Donald Trump said he believes "the Fed has gone crazy" amid recent interest rate hikes.

On Wednesday, the Dow plunged more than 830 points as investors anxious that rising interest rates might slow economic growth.

"I'm paying interest at a high rate because of our Fed", he said.

Kevin Hassett, the head of Trump's Council of Economic Advisers, said the president is expressing his views on monetary policy, but he isn't trying to "politicize" the Fed.

As well as criticising the Fed, Mr Trump said his trade policies had hurt China's economy.

In previous years, financial markets have been doubtful that the Fed would follow through with its forecasts for rate increases.

Trump blamed the Federal Reserve for the global stocks rout that continued on Thursday for a second day amid concerns about rising interest rates.

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Trump previously criticized the Fed for allowing too much money into the economy in several tweets from 2011, before he became the president. "No, I think the Fed is making a mistake".

"He has never attacked the Fed's plan or strategy", Kudlow told reporters on the White House lawn Thursday, speaking before Trump's Oval Office comments. "He has never interfered with that".

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation".

On Friday, federal data showed that the USA jobless rate fell to 3.7 percent in September, it's lowest point since 1969.

"The four per cent drop in the S&P 500 so far this week suggests that investors are starting to factor in the prospect of the USA economy slowing in response to tighter monetary policy", he wrote in a research note on Thursday.

"The trade war with China, we're taking in billions of dollars in tariffs from China, from Chinese goods, and it hasn't hurt us at all". Powell said last week he expects to stick with the current path of gradual interest-rate hikes while monitoring risks in the economy. Stocks had come close to big drops in the last few days, but each time they recovered some of their losses.

The Fed has raised rates three times this year and is expected to push through another rise by the end of December, with three more planned in 2019. The president is not dictating policy to the Fed.

But, crucially, the higher long-term interest rates don't seem to be driven by expectations that inflation will soar higher.

Raising interest rates was justified "for those economies that are showing much improved growth, inflation that is picking up... unemployment that is extremely low", Lagarde told a press briefing in Bali, Indonesia where the International Monetary Fund is holding its annual meeting.

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