Trump calls stock selloff 'a correction,' says Federal Reserve is 'crazy'

After a long stretch of relative calm the stock market has suffered sharp losses over the last week

"Actually it's a correction that we've been waiting for a long time, but I really disagree with what the Fed is doing", Trump told reporters before a political rally in Pennsylvania.

And while he acknowledged higher rates helped savers, he criticized the Federal Reserve's tactics as 'too aggressive'. "But I think it's far too stringent far too fast".

Trump's blunt public criticism of the Fed, which began this summer, is without precedent.

The central bank had raised the benchmark lending rate, which affects everything from mortgages to auto loans to bond yields, just twice before Mr Trump took office in January 2017, after a campaign in which he criticized the institution for allegedly keeping rates near zero in a bid to help his opponent.

For example, inflation of 2.16 percent a year over the coming decade is implied by the current price gap between the two types of bonds, up only a smidgen since August and below its level in May.

During panel discussions at the International Monetary Fund's (IMF) annual meetings in Bali, Indonesia, yesterday, South African Reserve Bank governor Lesetja Kganyago stressed the importance of central bank independence when he was asked whether Trump's comments demean the integrity of the institutions.

The Federal Reserve is very loud and clear with its rhetoric. That issue has never arisen in regard to an individual Fed official. Remember, trade wars can last a long time. Over the past year, the Fed has been raising rates once every quarter, or a pace of four times in a year. That gave Carter an opening to make Paul Volcker the new Fed chairman, someone the Carter administration regarded as better equipped to combat high inflation.

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How could the interest rate hikes cause an economic crisis? Increased borrowing demand by Uncle Sam would lead to rising rates, all things being equal. One way is the "discount rate" that the Fed charges member banks.

The yuan has fallen in recent days on trade concerns, raising questions about whether the People's Bank of China (PBOC) would allow it to fall below the psychologically important level of seven to the dollar, a level the PBOC has defended previously.

"It's all about investors rethinking their exposure to stocks."Many of the biggest U.S. 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".

Further interest-rate increases are "not unreasonable" given the strength of the expansion, said James Knightley, chief worldwide economist at ING Groep NV in London.

"We know the Fed is independent".

The breach of norms is not surprising for a real-estate-developer and reality-star-turned-president who has cheered as Wall Street has soared to new heights this year, hitting repeated records, and used that as proof his economic policies were working. Trump added, "The Fed is going loco".

Mr. Williams' prepared remarks closely followed recent speeches of his, which expressed optimism for the economy and an appetite for more rate increases. Rather, he has stressed that the central bank handles its job without regard to politics. Fed officials including Powell, Trump's handpicked chair, have said pointedly that they will not be influenced by comments from elected officials, and will make decisions based on economic data.

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