Global stocks tumble after President Trump’s ‘crazy’ comment about the Federal Reserve

Share

The Federal Reserve can likely stop raising USA interest rates once they reach about 3 per cent, as long as inflation remains around 2 per cent and the economy is doing well, Chicago Federal Reserve President Charles Evans suggested on Wednesday. "I think the Fed is making a mistake", he said before a rally with his supporters in Erie, Pa.

"The Fed has gone insane", Mr. Trump told reporters while traveling to Erie, Pennsylvania, for a campaign rally.

"It's a correction we have been waiting for a long time", Trump said.

The Dow Jones industrial average dropped 2.2 percent, or more than 550 points.

Trump, who has frequently invoked rising stock prices as an affirmation of his economic policies, downplayed the significance of the market drop even as he pointed the finger at the Fed.

The selloff came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets.

Higher interest rates tend to moderate economic growth and makes borrowing more expensive for the USA government as well as businesses and consumers.

The steep drop in Japan 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.

"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".

"Also, very importantly I think, the numbers we're producing are record-setting", Trump added.

Economists generally agree that in order to prevent runaway inflation, the Federal Reserve can raise interest rates to restrain the money supply.

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.

Just two hours before, CNBC reported that an unnamed senior White House official told its correspondent that, "This is a bull market correction".

Fresh concern about a trade war with China and rising interest rates have in part sparked a broad US stock market sell-off, with the S&P 500 on Wednesday falling the most since February. "President Trump's economic policies are the reasons for these historic successes and they have created a solid base for continued growth".

"I believe this selling is an overdone panic", Feinseth said. "It is doing well", Trump said.

Share