Donald Trump says Fed has 'gone crazy' after Dow Industrial Average tumbles

A screen above the floor of the New York Stock Exchange shows the closing number of the Dow Jones industrial average Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp dec

International Monetary Fund managing director Christine Lagarde said she "would not associate" Federal Reserve Chairman Jerome Powell "with craziness" after US President Donald Trump commented that the central bank, which has been raising US interest rates, had "gone insane", CNBC reported on Thursday.

Donald Trump's use of the word correction to describe the sell-off could be significant. He frequently celebrates publicly when the stock market reaches new highs, pointing to the gains as affirmation for his economic policies. It has fallen almost 5% from its all-time closing high on September 20. It is often tied to higher costs of borrowing for the federal government, which can spook investors.

A spike in Treasury yields and solid USA economic data have sparked concerns that the Federal Reserve may pick up the pace of its interest rate hikes.

Trump, who has been critical of the central bank's interest rate increases, tells reporters after landing in Erie, Pennsylvania, that he thinks "the Fed is making a mistake". However, during his last press conference following the Federal Open Market Committee's most recent two-day meeting in September, Powell said he and his colleagues were focused on carrying out the bank's dual mandate of achieving maximum employment and stable prices. The figure calmed investors because a high reading could fuel expectations that the Fed would keep raising its interest rates at a steady pace.

Earlier, he told Fox News the Fed was being "too aggressive" by raising interest rates this year and getting "a little bit too cute".

"I don't think it's that at all", he said.

United States presidents have rarely criticised the Fed in recent decades because its independence has been seen as important for economic stability.

Trader Peter Tuchman works on the floor of the New York Stock Exchange Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp declines in technology stocks. (AP
How Sensex lost Rs 4 lakh crore after Donald Trump’s crazy comment

However, asked about Powell's future, Trump said, "I'm not going to fire him".

The Federal Reserve is mandated by Congress to aim for low inflation and low unemployment.

The gradually rising rates, Fed officials say, are meant to guard against any quick run-up in inflation, while remaining low enough so far for the recovery and a strong run of job growth to continue.

Tech stocks are the biggest loser in the recent sell-off.

Markets in Paris and Frankfurt both lost more than 2%, while London fell 1.3%.

He has frequently criticised the United States central bank for gradually raising interest rates, and on Wednesday reiterated his position: "I really disagree with what the Fed is doing".

In Hong Kong - where the benchmark Hang Seng index is already down 15% this year - some of the biggest listed companies were also under pressure.


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