Fed ‘has gone crazy’ as it raises interest rates

Daniel Fowler
October 11, 2018

President Donald Trump signaled his anxiety about the Federal Reserve's plan to keep raising interest rates into 2019 after stocks plunged on Wednesday.

"I don't like it", Trump said Tuesday at the White House, referring to the Fed's rate hikes, the most recent of which was September 26. "They're so tight. I think the Fed has gone insane", Mr. Trump told reporters after landing in Erie, Pa., for a political rally.

"Actually, it's a correction that we've been waiting for, for a long time", Trump said regarding the stock market.

"I really disagree with what the Fed is doing", Trump said. The Fed has predicted that unemployment will remain below 4 percent through 2020 and inflation is expected to track around 2 percent, conditions that Federal Reserve chief Jerome Powell called "remarkably positive".

Later on Wednesday in an interview on Fox News, Trump dismissed the idea that trade tensions with China caused the dive.

Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies $110 billion of American products. No, that wasn't it. The problem I have is with the Fed. The Fed is going wild.

"I'd rather pay down debt or do other things, create more jobs, so I'm anxious about the fact that they seem to like raising interest rates".

He added later, "The problem, in my opinion, is Treasury's and the Fed".

"There are a number of worries for investors right now, from the pace of rising bond yields and the impact on investor sentiment, to Italy's populist coalition playing a game of chicken with the European Commission, stalling Brexit negotiations and the ongoing trade conflict between the United States and China", said Craig Erlam, senior market analyst at Oanda trading group.

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Trump, who departed for Erie just before markets closed on Wednesday, was briefed by officials about the sell-off.

On Wednesday, the Dow fell 831 points, or 3.1 percent, to 25,598.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month.

Bourses in Paris and Frankfurt both lost more than two%, while London fell 1.3%.

The S&P 500 posted its fifth straight decline, plummeting almost 3.3%.

'As stocks go up, tech goes up more than the stock market.

China Mobile shares fell 3.7%, insurance group Ping An dropped 4.1% and China Construction Bank lodged a slide of 3.2%.

Jasper Lawler, head of research at London Capital Group, offered this explanation: "The bloodbath for global equities comes as investors adjust to a world of higher United States interest rates and USA treasury yields".

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