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Trump on 831 Stock Market Drop: Fed Has Gone Crazy

11 October 2018

The Federal Reserve can likely stop raising USA interest rates once they reach about 3 per cent, as long as inflation remains around 2 per cent and the economy is doing well, Chicago Federal Reserve President Charles Evans suggested on Wednesday. "I think the Fed has gone insane". A stock market correction is defined as a fall of at least 10 per cent from the high point of the last 52 weeks.

The Dow Jones Industrial Average has plunged more than 800 points, its worst drop in eight months, led by sharp declines in technology stocks.

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

"I think. the Fed is making a mistake".

Despite Wednesday's sell-off, the S&P 500 would still need to more than double its losses. "I think the Fed has gone insane".

Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies of $110 billion of American products.

Trump has departed from that practice and has said he would not shy from future criticism should the Fed keep lifting rates.

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Even so, one reason why the Fed has been raising interest rates even with little sign of an inflation breakout is because the unemployment rate, which fell to 3.7 per cent in September, is at a level that many officials expect will cause wage and price gains to accelerate over time.

Powell's goal is to extend the second-longest USA economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. The problem I have is with the Fed.

"Clearly stocks are spooked by higher rates and maybe some inflation that seems to be creeping in", said Michael Farr, CEO of Farr, Miller & Washington.

White House Press Secretary Sarah Sanders said in a statement following the close of markets that the USA economy is "incredibly strong" despite the selloff, which analysts attributed in part to trade tensions with China.

Trump has previously voiced his displeasure with the Fed's rate hikes, saying he would rather shift his focus to the continued growth of the US economy and creating more jobs.

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

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong US economy and solid corporate earnings. "It is doing well", Trump said.

Trump on 831 Stock Market Drop: Fed Has Gone Crazy