Trump 'disappointed' in Fed chair Jerome Powell as global stocks tumble

13 October, 2018, 18:58 | Author: Eric Barnett
  • US stocks have plunged to their worst loss in eight months

Wednesday President Trump went further and knocked the Federal Reserve for continuing to raise interest rates despite some recent market turbulence.

Despite Trump's attacks on the central bank, economists say that, with unemployment at its lowest level in 48 years and monthly job creation holding steady, the Fed is likely to stick to its current course of rate hikes, with a fourth increase expected in December, and three or four in 2019.

"It is a correction that I think it is caused by the Federal Reserve with interest rates", Mr Trump told reporters at the White House.

US central bankers have raised the benchmark lending rate three times this year, and investors see more than 70 percent probability of another hike in December. Presidents for more than two decades had avoided public comments on the Fed's interest-rate policies as a way of demonstrating respect for the institution's independence.

Trump selected Powell, a Republican who served in the George H.W. Bush administration, to lead the Fed over a number of other candidates - including several who favoured even more aggressive rate hikes. I don't know what their problem is.

The comments followed his strongest criticism of the Fed late Wednesday when he said the central bank had "gone insane".

White House economic adviser Larry Kudlow on Thursday said Trump's opinions had no weight on the Fed's actions.

The precipitous fall of the market in previous days has alarmed Trump who had tethered his electoral fortunes to soaring stocks.

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President Trump's trade war with China is starting to take a bite out of growth, energy prices are rising, the global economy is slowing and USA interest rates are going up.


And while borrowers lament higher interest rates, savers, especially seniors, are celebrating that they can finally earn some interest from their savings accounts.

The last time average mortgage rates were near the 5 percent level was in April 2011.

In a sign of how much animosity Trump now holds toward the central bank, Moore said he believes Trump regrets appointing Powell to the position.

Kudlow said the Fed was managing 'the transition from ultra, ultra easy money.to something more normal, ' by raising rates gradually.

"I'm not thrilled because we go up", he explained, "and every time we go up they want to raise rates again, and I don't really - I am not happy about it, but at the same time I'm letting them do what they feel is best".

Can Fed Policy Cause Sudden Stock Market Crashes?

"The real question is not whether the Fed should be raising the interest rates from where they are now, but how far and how fast should they raise interest rates".

"Diversification is like a shock absorber to weather the storms in the market", Jeanne Thompson, senior vice president at Fidelity Workplace Investing, told CBS MoneyWatch.

The turmoil on stock markets came after the International Monetary Fund slashed its global growth forecast Monday on worries over the US-China trade war and weakness in emerging markets.

The right thing includes doing "whatever it takes" to keep inflation from accelerating, he said. Economic experts are split on how long the strong economy will continue, and some investors are convinced that a number of stocks - particularly technology companies - are overpriced and were due for a slide.

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