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Trump Blames "Crazy" Federal Reserve As Wall Street Suffers Ugly Losses

13 October 2018

International Monetary Fund managing director Christine Lagarde said she "would not associate" Federal Reserve Chairman Jerome Powell "with craziness" after US President Donald Trump commented that the central bank, which has been raising US interest rates, had "gone insane", CNBC reported on Thursday.

"No, I'm not going to fire him".

During a rally in Pennsylvania on Wednesday night, Trump said he didn't believe the Fed was accurately adjusting its interest rate policy in line with US economic data.

"Part of President Trump's brand is he says what he thinks, but he respects the independence of the Fed and that's clear from his nominations", Hassett said at Council on Foreign Relations on Tuesday.

He has frequently criticised the U.S. central bank for gradually raising interest rates. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.

Fed Chairman Jerome Powell said then that rates remain low enough to continue stimulating economic growth. I don't know what their problem is.

Trump himself later told reporters he would not try to oust Powell, Trump's handpicked successor to former Fed chair Janet Yellen, and a well-regarded insider in moderate Republican circles. "They're so tight. I think the Fed has gone insane", he said.

"The market seems to have accepted the Fed's rate path", said Megan Greene, chief economist at Manulife Asset Management.

White House Press Secretary Sarah Huckabee Sanders said in a statement following the close of markets that the US economy is "incredibly strong" despite the sell-off. Now, in traditional economic thinking, low unemployment leads to rising wages, which leads to inflation, which leads to higher policy rates.

US President Donald Trump looks on as Federal Reserve Chairman Jerome Powel speaks at the White House. "They're raising rates and it's ridiculous".

For instance, the September report, which came out on October 5, found the unemployment rate had dropped to 3.7 per cent, a almost 50-year low; wage growth also strengthened.

Though the Fed has been raising its overnight target policy rate, a benchmark for lending costs overall, the current level of between 2 and 2.25 percent remains just half the average set by the Fed between 1990 and the start of the 2007 to 2009 recession. As bond prices fall, driving up interest rates, funding costs for business and individuals rise, inhibiting economic activity.

Treasury Secretary Steven Mnuchin said Friday the United States economy remained strong and this week's decline in the stock market was "just a natural correction". In other words, the steady rise in the Fed's policy rate, and estimates for future hikes, haven't translated into harsh financing conditions for the overall economy yet.

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

The turmoil came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets.

Although the drop was unusually large, the stock market has been on a historic run of gain since the president's inauguration. "But I really disagree with what the Fed is doing".

The rough month for stocks began when the bond market got spooked by rising interest rates.

In a sign of how much animosity Trump now holds toward the central bank, Moore said he believes Trump regrets appointing Powell to the position.

Trump said he had no intention of firing Powell.

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