Trump on 831 Stock Market Drop: Fed Has Gone Crazy

Kenny Grant
October 11, 2018

The Dow Jones dropped by more than 800 points on Wednesday in one of the worst days for the stock market since February, and President Donald Trump had an explanation ready when asked by reporters.

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

He adds, "I think the Fed has gone insane".

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

The broad US stock market sell-off Wednesday took the S&P 500 to the lowest in three months, the Dow Jones Industrial Average plunged as much as 836 points and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years.

Central bankers from around the world jumped to the U.S. Federal Reserve's defense after President Donald Trump accused the central bank of going "loco".

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.

Meanwhile, Europe's main stock markets slid by around 1.5% at the start of trading today following heavier falls across Asia and on Wall Street overnight.

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But in August, Trump said he was "not thrilled" with Powell, though he took his criticism much further on Wednesday when he said the Fed was "crazy".

Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies of $110 billion of American products. By convention presidents rarely comment on central bank policy because the Fed is meant to be independent of politics.

Earlier on Tuesday, White House economist Kevin Hassett said the administration respects the Fed's independence and pointed to Trump's nominees to the central bank as evidence of its non-partisan approach to the setting of monetary policy.

"I wonder today whether Trump really has some buyer's remorse with respect to selecting Powell as his Fed chairman, because that was a unusual pick", Moore said.

The 10-year yield is now 3.20 percent, the highest in than seven years and up sharply form 2.82 percent in late August. Economists generally agree that in order to prevent runaway inflation, the Federal Reserve can raise interest rates to restrain the money supply.

The White House said Wednesday that the "fundamentals and future" of the USA economy are "incredibly strong" despite the big losses in the stock market.

Trump has said he likes low interest rates, in part because of his background in real estate.

During an event earlier Wednesday amid the sell-off, Trump and his top economic adviser, Larry Kudlow, said they believed the American economy was robust.

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