Published: Fri, October 12, 2018
Economy | By

'The Fed has gone crazy' with interest rate hikes

'The Fed has gone crazy' with interest rate hikes

US President Donald Trump has renewed his attacks on the central bank, the Federal Reserve, calling it "out of control" and "far too stringent".

"I think the Fed is making a mistake", Trump told reporters as he arrived for a campaign rally ahead of the U.S. mid-term elections.

Trump had blamed "crazy" Fed policies for contributing to current financial market turmoil as a global sell-off continued amid stronger signs of rising financial volatility which the International Monetary Fund and the World Bank were scheduled to address during their annual meetings. "But I really disagree with what the fed is doing. OK?"

US stocks dropped for a second day on Thursday, underscoring investors' concerns over rising interest rates and a trade war, despite inflation data that was weaker than expected.

Trump has been publicly criticizing the Fed since July for interest-rate increases and declared he was "not happy" in September when the central bank raised rates for the third time this year.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.

Following the plunge, President Donald Trump said the Federal Reserve "is making a mistake" to hike interest rates.

Investor sentiment also has been dampened by the escalating trade fight between the US and China.

Wall Street was on a roller coaster ride Thursday, losing more than one percent on the Dow and S&P, but then recovering slightly.

Shares on London's FTSE 100 index were down 1.4% in opening trade, while the Frankfurt DAX dropped 1.3% and the Paris CAC shed 1.5%.

Kevin Hassett, the head of Trump's Council of Economic Advisers, said the president is expressing his views on monetary policy, but he isn't trying to "politicize" the Fed.

"We know the Fed is independent".

Fed spokeswoman Michelle Smith declined to comment on Trump's remarks. "He didn't say anything remotely like that", he said on CNBC.

Kudlow said the Fed was managing "the transition from ultra, ultra easy something more normal", by raising rates gradually. The figure calmed investors because a high reading could fuel expectations that the Fed would keep raising its interest rates at a steady pace.

Meanwhile, trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings - something analysts said had helped prompt Wednesday's sell-off. "It's all about investors rethinking their exposure to stocks."Many of the biggest USA names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than four percent and Amazon, Nike and Microsoft shedding more than five percent". "We just try to do the right thing for the medium- to long-term for the country".

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