Trump on 831 Stock Market Drop: Fed Has Gone Crazy

US stocks have plunged to their worst loss in eight months

Trump said that the fall in stock market was a correct that I have been waiting for long but he launched a frontal attack on Federal Reserve calling it insane. "There are ups and downs, and I think it's fair to observe that the US equity markets and stock markets in general have been extremely high", she said on Thursday.

The Federal Reserve has been gradually raising interest rates to less stimulative levels in response to strong growth in the USA economy and historically low unemployment levels.

Dallas Fed President Robert Kaplan said he still favors the central bank raising short-term interest rates three more times before deciding whether more increases will be necessary to keep the economy on an even keel.

But for all the stock market palpitations and risks to particular interest-rate sensitive industries, the message to take from the recent rise in interest rates is an unambiguously good one: This expansion may have some life in it yet. "They're so tight." He noted of today's market, "It's a correction that we've been waiting for, for a long time". "The problem in my opinion is the Fed, " he added.

The president made the comments after a massive sell-off on Wall Street on Wednesday, where more than 800 points were shaved off the Dow Jones Industrial Average.

The selloff came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets.

The US and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months. The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than $500 billion in goods the USA bought from China past year.

The Federal Reserve has steadily tightened monetary policy amid an economic boom in the United States, something Trump has repeatedly criticized.

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Trump previously criticized the Fed for allowing too much money into the economy in several tweets from 2011, before he became the president. "I think what they're doing is wrong".

Jasper Lawler, head of research at London Capital Group, offered this explanation: "The bloodbath for global equities comes as investors adjust to a world of higher U.S. interest rates and USA treasury yields".

White House Press Secretary Sarah Sanders issued a statement on the drop as well.

Mickey Levy of Berenberg Capital Markets says, "Despite the market's apparent concerns about an imminent acceleration in inflation, recent producer, consumer and import price data all point to moderating inflationary pressures after an acceleration earlier this year".

Powell's goal is to extend the second-longest USA economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth.

"It's probably healthy. This will pass and the USA economy remains strong".

Some of his former advisers said they believed Trump's criticisms of the central bank were warranted.

"The Fed is out of control", Trump said.

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