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After Stock Market Drop, President Trump Says Federal Reserve ‘Has Gone Crazy’

12 October 2018

President Donald Trump slammed the Federal Reserve as "crazy" for its interest-rate increases this year in comments hours after the worst US stock market sell-off since February.

On the market selloff on October 10, Trump said "actually, it's a correction that we've been waiting for for a long time, but I really disagree with what the Fed is doing".

"I don't like it", Trump said Tuesday at the White House, referring to the Fed's rate hikes, the most recent of which was September 26. "I think our nominees have been absolutely first rate".

"This is just who we are and I think who we will always be, which is, we're a group who - we're quite removed from the political process", Powell said in a recent interview. It is often tied to higher costs of borrowing for the federal government, which can spook investors. "That's all. It's ridiculous what they're doing". Higher interest rates could increase his debt payments considerably.

Adams said investors have concerns about their future profitability, too, making technology stocks more volatile in the last few months.

The market is reacting to a "triple whammy" of rising interest rates, higher oil prices and a stronger dollar, according to Yardeni Research.

Trump said the downslide of the stock was in fact a course correction.

Both Powell and the president confirmed in recent days that they have not spoken to each other about interest rates.

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"I'm paying interest at a high rate because of our Fed", he added, referring to the cost of servicing the USA deficit. Powell defended the Fed's plans to raise interest rates gradually in the coming months, saying it was appropriate policy in such "extraordinary" economic times.

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

The Fed traditionally remains outside the purview of the President, though Trump has at moments blurred the lines by commenting on Fed policy.

Trump previously criticized the Fed for allowing too much money into the economy in several tweets from 2011, before he became the president.

Stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above three percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve rate hikes.

Some of his former advisers said they believed Trump's criticisms of the central bank were warranted.

The steep drop in Asia followed Wednesday's plunge in NY, with the Dow Jones dropping almost 830 points - the biggest fall since February - after Trump's latest criticism of the Federal Reserve.

Dramatic and sustained stock market declines can feed into that outlook through a "wealth effect" if they begin to erode household and business confidence, and prompt consumers and investors to curtail spending.

After Stock Market Drop, President Trump Says Federal Reserve ‘Has Gone Crazy’