Published: Thu, October 11, 2018
Business | By Eloise Houston

US President Trump calls the US Fed 'crazy', stock declines a 'correction'

US President Trump calls the US Fed 'crazy', stock declines a 'correction'

Mr. Trump said earlier this week that he thought the central bank was moving too quickly with a series of planned interest rate hikes.

Trump's comments echo his previous criticisms of recent months, which broke more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the USA central bank. Hassett pointed to the six nominees Trump has made so far to serve on the Fed's board of governors, all of whom have spent extensive time in finance, banking or academia.

"I think we don't have to go as fast", the president said. "It's all about investors rethinking their exposure to stocks".

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. "I like to stay uninvolved", Trump said.

Stocks have sold off in recent days on worries about higher borrowing costs.

Interest rates are rising.

Trump's use of the word "correction" to describe the selloff could be significant.

Trump indicated he had not spoken with Powell. They have reached out to the Fed leader to ensure there hasn't been improper political interference. "We just try to do the right thing for the medium- to long-term for the country. We can do other things with the money", the president said at a September press conference in NY.

The Fed has been raising interest rates gradually since December 2015, and last month lifted its target for short-term rates to a range of 2 per cent to 2.25 per cent, responding to an economy that has been growing at a pace well above what Fed officials believe is sustainable. Trump has been publicly criticizing the Fed since July for interest-rate increases and declared he was "not happy" in September when the central bank raised rates for the third time this year.

One former Treasury official said while Trump's comments are unusual, they don't appear to be changing the Fed's direction.

Inflation, which had been worrisomely low in Mr Evans' view, is now at the Fed's 2-per cent target. It is also expected to raise rates again by the end of the year.

"The Fed continues to flood the market with U.S. dollars", he said in one tweet. "That doesn't seem especially surprising".

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee (FOMC) policy meeting in Washington, U.S., September 26, 2018.

"The fundamentals and future of the USA economy remain incredibly strong", Sanders said in a statement.

"No I think the Fed is making a mistake", he said. "Where is the inflation that they are fighting?"

The fall in US stocks on Wednesday triggered a global sell-off as investors fretted repeated rounds of interest rate hikes and the ongoing US-China trade war. Economic growth has improved, and Republicans have taken steps to cut taxes and regulations.

Tech and luxury stocks have been among those to feel the worst pain in the sell-off.

But Trump loves to tout good economic news, and either dismisses bad economic news or blames it on the Fed. The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than $500 billion in goods the USA bought from China previous year.

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