President Trump blames 'loco' Federal Reserve for October's big stock drop

12 October, 2018, 00:13 | Author: Regina Silva
  • Trader Gregory Rowe works on the floor of the New York Stock Exchange Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp declines in technology stocks. (AP

President Donald Trump renewed his attacks on the USA central bank on Thursday, saying it was "too aggressive" in raising interest rates.

Trump has previously criticized the Federal Reserve for its interest-rate hikes and said it did not "have to go as fast".

The president said of the market losses, "Actually, it's a correction that we've been waiting for a long time".

"I'm paying interest at a high rate because of our Fed, " he said. Fed officials including Powell, Trump's handpicked chair, have said pointedly that they will not be influenced by comments from elected officials, and will make decisions based on economic data.

Central bank rate hikes were a "necessary development", said International Monetary Fund chief Christine Lagarde.

Trump has repeatedly criticized the Fed over the past 24 hours as markets plunged, saying Wednesday that the central bank was "going loco".

"I think they're making a big mistake", Trump said during a broadcast of Fox & Friends. Investors worry the tariffs imposed in the trade dispute could boost inflation, slow global growth and reduce company profits, all negatives for stocks.

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Wall Street was on a roller coaster ride Thursday, losing more than one percent on the Dow and S&P, but then recovering slightly. London lost almost two percent, Frankfurt fell 1.5 percent, and Tokyo plunged almost four percent.

On Thursday, White House economic adviser Larry Kudlow sought to downplay Trump's comments about the Fed.

USA presidents have rarely criticised the Fed in recent decades because its independence has been seen as important for economic stability. "He didn't say anything remotely like that", he said on CNBC.

Mr Evans said he estimates neutral to be around 2.75 per cent, so "something a little bit above that would be slightly restrictive" and would allow the unemployment rate to rise gradually to a more sustainable level.

Trump has often pointed to stock market records set during his time in office as a measure of his success.

The Fed last raised interest rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the USA economy would enjoy at least three more years of economic growth. But the remarks are a sharp departure from Trump's recent predecessors. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.

On Wednesday, FBI director Christopher Wray said that China represents the "broadest, most complicated, most long-term" threat to the U.S. and that it is waging a massive influence campaign over American voters ahead of the November midterm elections.

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