Trump lashes 鈥榓ggressive鈥 Fed over interest rate hikes
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President Donald Trump renewed his attacks on the US central bank yesterday, saying it was 鈥渢oo aggressive鈥 in raising interest rates.
鈥淚 think they鈥檙e making a big mistake,鈥 Trump said during a broadcast of Fox & Friends. While he acknowledged that higher rates helped savers, he criticized the Federal Reserve鈥檚 tactics.
鈥淭hey鈥檙e being too aggressive.鈥
The comments followed his unprecedented criticism late yesterday, when he said the Fed had 鈥済one crazy,鈥 and blamed the interest rate increases for the stock sell-off, which caused the Dow Jones Industrial Average to lose more than 800 points, in its worst tumble since February.
The rout caused a domino effect worldwide, with losses spreading to Asia and Europe as investors remained concerned about rising rates, which would send more buyers out of equities and into bonds.
Trump has repeatedly touted the spate of Wall Street records as proof of the success of his economic program, including his confrontational trade strategy, and criticized the Fed for raising the benchmark interest rate 鈥 three times this year 鈥 saying it would undermine his efforts.
In fact it is largely his policies that are behind the changes: tax cuts and increased government spending are expected to juice the economy, adding to the Fed鈥檚 justification to raise interest rates.
Meanwhile, trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings 鈥 something analysts said helped prompt Wednesday鈥檚 sell-off.
While Trump said rising rates after years near zero are 鈥済ood for people with money in the bank and now they can get interest on their money for first time in a long time,鈥 he insisted yesterday the Fed was 鈥渕aking a mistake.鈥
The attacks on the Fed are another example of Trump breaking with recent norms. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.
Fed Chair Jerome Powell, whom Trump named to lead the central bank, has repeatedly brushed off the comments saying officials do not pay attention to politics.
鈥淭his is just who we are and I think who we will always be, which is, we鈥檙e a group who 鈥 we鈥檙e quite removed from the political process,鈥 Powell said in a recent interview.
鈥淎nd we just try to do the right thing for the medium and longer term for the country.鈥
International Monetary Fund chief Christine Lagarde also defended the Fed yesterday.
Raising interest rates was justified 鈥渇or those economies that are showing much improved growth, inflation that is picking up... unemployment that is extremely low,鈥 Lagarde told reporters in Bali, where the IMF is holding its annual meeting.
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