Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

Marco Green
October 11, 2018

President Trump said that the Federal Reserve has "gone crazy" on short-term interest rates, marking his latest swipe at policy makers in reaction to the stock market's tumble on Wednesday. "They're so tight." He noted of today's market, "It's a correction that we've been waiting for, for a long time".

Mr Trump said: "I like to see low interest rates". A stock market correction is defined as a decline of at least 10 percent from the high point of the past 52 weeks, suggesting that major US indices have further to fall.

The Dow Jones Industrial Average sank 831 points Wednesday, an approximately 3.15 percent drop. "But I really disagree with what the Fed is doing, okay?" Presidents for more than two decades had avoided public comments on the Fed's interest-rate policies as a way of demonstrating respect for the institution's independence. The criticism is also unusual given that Jerome Powell, the Fed chairman, was appointed by Mr...

Fed spokeswoman Michelle Smith declined to comment on Trump's remarks.

In fact it is his policies that are behind the changes: tax cuts and spending policies are expected to juice the economy, adding to the Fed's justification to raise interest rates, while trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings - something analysts said helped prompt Wednesday's sell-off.

But those actions have drawn scorn from Trump, who has accused the Fed of moving too fast in raising rates when inflation is minimal and government data points to a strong economy.

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".

White House Press Secretary Sarah Huckabee Sanders said in a statement following the close of markets that the USA economy is "incredibly strong" despite the sell-off.

Trump was briefed on the market turmoil earlier in the day, a White House official said.

Last week's jump in yields followed strong USA data but many analysts have been anticipating dynamics in the bond market to change due to expectations that central banks in Europe and Japan will soon phase out bond-buying programmes.

Those programmes - such as quantitative easing - are now ending and the Fed has raised USA interest rates three times already this year, raising borrowing costs, and could add a fourth hike by the end of 2018.

Other reports by Click Lancashire

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