Trump blames ‘loco’ Fed for stock market slide - http://earlyretireonline.com | how to earn money fastOctober 11, 2018 12:25 pm
Categorised in: Breaking Financial News
President TrumpDonald John TrumpTrump repeats claim without evidence that paid protesters disrupted his rallies Five takeaways from the final Tennessee Senate debate Trump rails against Dems at Pennsylvania rally as Hurricane Michael batters Florida MORE late Wednesday blamed the Federal Reserve for triggering a steep stock sell-off earlier in the day, saying the central bank “is going wild” with a “ridiculous” series of interest rate hikes.
Calling into Fox News late Wednesday night, Trump said the Fed “is going loco” and blamed the central bank for causing U.S. stocks to suffer their worst day since February.
The Dow Jones industrial average dropped 831 points Wednesday, losing 3.2 percent on the day, while the Nasdaq composite and S&P 500 lost 4 percent and 3.3 percent each.
“The problem in my opinion is [Treasury bonds] and the Fed,” Trump told Fox News. “The Fed is going loco and there’s no reason for them to do it and I’m not happy about it.”
Trump explicitly blaming the Fed for the stock downturn is a major escalation of his frequent criticism of the central bank. The president told reporters earlier Wednesday that the Fed “has gone crazy” with rate hikes, but said the earlier stock downturn was “actually … a correction that we’ve been waiting for for a long time.”
Trump has blasted the Fed and Chairman Jerome Powell since July for raising interest rates. The Fed has raised rates eight times since 2015 and six times since Trump took office, seeking to bring monetary policy toward neutral levels.
Most Republicans and right-leaning economists support the Fed’s efforts to raise interest rates before inflation spirals out of control. But Trump has dismissed concerns about rising prices and said the Fed should keep rates low to help stimulate the already strong economy.
There’s a broad bipartisan consensus among economists that the U.S. economy could overheat if the Fed does not gradually bring interest rates closer to neutral. The Fed also risks stifling economic growth if it raises rates too quickly.
“The problem that I have is with the Fed,” Trump said late Wednesday, “The Fed is going wild. I mean, I don’t know what their problem is that they are raising interest rates and it’s ridiculous.”
During a phone interview early Thursday on “Fox & Friends,” Trump continued his criticism, saying the Fed is “getting a little bit too cute.”
“It’s ridiculous what they’re doing,” he said.
“When I took over this economy, this economy was ready to crash,” he added.
Higher Fed interest rates increase borrowing costs, which narrow corporate profit margins and spook investors away from volatile and quickly growing stocks. Traders pulled back their bets on stocks Wednesday over concerns about rising interest rates, parking investments in Treasury bonds and other assets seen as safe havens.
–This report was updated at 8:58 a.m.