Economy

Trump calls 'loco' Federal Reserve 'too aggressive'

Trump calls 'loco' Federal Reserve 'too aggressive'”

"I find myself in general agreement with Trump on his criticism of the Fed, which is that raising interest rates now doesn't seem necessary", Moore said.

The Fed's controls the levers of the USA economy by making policy, so it makes sense that traders would be fearful when the President criticizes the agency.

Past U.S. presidents have criticized the central bank, but the recent run of invective was unusual even for Trump.

The US central bank once again is on the firing line following President Donald Trump's unprecedented attacks but is likely to shrug it off and focus on economic data.

It was the latest in series of recent barrages the president has unleashed at the Fed, which under his hand-picked chairman, Jerome Powell, has been gradually raising rates as the economy has strengthened to prevent a run-up in inflation. "But I think it's far too stringent far too fast".

"The Fed is making a mistake", he told reporters on Wednesday as he arrived in Pennsylvania for a campaign rally. "They're so tight. I think Fed has gone insane", he said.

Right now, the notion that Trump is responsible for the stock market is strong, mostly because that claim has been hammered over and over-by Trump himself. "It's a correction that I think is caused by the Federal Reserve with interest rates".

The steep drop in Asia followed a decline on Wall Street of almost 830 points, the biggest fall since February, amid Trump's latest criticism of the Federal Reserve, the USA central bank.

By historic standards, interest rates remain low. A full term on the seven-member Fed board lasts 14 years - a lengthy period that was seen as liberating Fed officials from any fear that their rate decisions might cost their jobs.

The Tel Aviv Stock Exchange was down more than two percent, Shanghai plummeted almost 5% while Tokyo and Hong Kong both shed around 4%, as investors fretted about surging interest rates and the ongoing US-China trade war.

As well as criticising the Fed, Mr Trump said his trade policies had hurt China's economy.

If investors are on edge now because of this week's declines, they will be really rattled if the Fed lost its independence.

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.

But one unintended effect is that raising interest rates can scare off investors and precipitate a sell off in equities.

Steven Mnuchin, Treasury Secretary, echoed that sentiment, referring to yesterday's stock market crash as a "correction".

International Monetary Fund chief Christine Lagarde also defended the Fed on Thursday. "It is doing well", Trump said. But according to the Wall Street Journal other officials have expressed a range of views, and some uncertainty, about how high rates would have to go to reach a so-called neutral level that neither spurs nor slows growth.

The breach of norms is not surprising for a real-estate-developer and reality-star-turned-president who has cheered as Wall Street has soared to new heights this year, hitting repeated records, and used that as proof his economic policies were working.

"It wouldn't take much for there to be a significant decline in consumer sentiment that seemingly comes out of nowhere", said Peter Atwater, president of Financial Insyghts.



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