Sunday, 15 December, 2019

White House says economy 'incredibly strong' after stock-market dive

Trump Says Fed Moving Too Fast With Interest Rate IncreasesMore Trump Says Fed Moving Too Fast With Interest Rate IncreasesMore
Ginger Lawrence | 11 October, 2018, 10:00

The Federal Reserve can likely stop raising United States 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.

"No I think the Fed is making a mistake", he said.

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

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged. "The Fed has gone insane", Trump said.

"I believe this selling is an overdone panic", Feinseth said.

The Dow Jones Industrial Average sank 831 points Wednesday, an approximately 3.15 percent drop. President Trump blamed the Federal Reserve - and his appointee Jerome H. Powell - for the big drop Wednesday.

Trump has been publicly criticizing the Fed since July for interest-rate increases and declared he was "not happy" in September when the central bank raised rates for the third time this year.

The turmoil came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets.

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That is 1,4% more than what the Council of Ministers asked from the newly elected government in July. The British pound and the Chinese Yuan also lost ground.

Fed spokeswoman Michelle Smith declined to comment on Trump's remarks.

She said in addition to rising interest rates, investors also fear that company profit margins will be squeezed by rising costs, including the price of oil.

He has frequently criticised the U.S. central bank for gradually raising interest rates.

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation". Officials expect to hike rates another quarter percentage-point by the end of this year and gradually continue to raise rates at least through 2019.

White House Press Secretary Sarah Sanders said in a statement following the close of markets that the U.S. economy is "incredibly strong" despite the selloff, which analysts attributed in part to trade tensions with China.

Those programmes - such as quantitative easing - are now ending and the Fed has raised USA interest rates three times already this year, raising borrowing costs, and could add a fourth hike by the end of 2018.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong US economy and solid corporate earnings.

"I like low interest rates", Trump said.