International Monetary Fund chief defends Powell after Trump says Fed has 'gone crazy'

Cornelia Mascio
Ottobre 12, 2018

President Donald Trump slammed the Federal Reserve as "crazy" for its interest-rate increases this year in comments hours after the worst USA stock market sell-off since February. "It's so tight. I think the Fed has gone insane", Trump told reporters as he arrived for a campaign rally ahead of the USA mid-term elections. "I think our nominees have been absolutely first rate".

"I find myself in general agreement with Trump on his criticism of the Fed, which is that raising interest rates now doesn't seem necessary", Moore said.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.

The benchmark Nikkei 225 dropped almost two percent at the open and extended losses to below the three-percent mark, as traders fretted about surging interest rates and an ongoing trade spat.

While he acknowledged that higher rates helped savers, he criticized the Federal Reserve's tactics. "I like to stay uninvolved", Trump said. Trump owes more than $300 million to Deutsche Bank of debt with interest rates that rise or fall depending on Fed policy.

Trump said the downslide of the stock was in fact a course correction. "We just try to do the right thing for the medium- to long-term for the country".

Trump indicated he had not spoken with Powell. Powell defended the Fed's plans to raise interest rates gradually in the coming months, saying it was appropriate policy in such "extraordinary" economic times.

A spike in Treasury yields and solid United States economic data have sparked concerns that the Federal Reserve may pick up the pace of its interest rate hikes. It is also expected to raise rates again by the end of the year.

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. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.

The central bank's preferred measure of inflation is roughly at policy makers' 2 percent objective, and Powell said last week that "the outlook of forecasters inside and outside the Fed is for more of the same".

Central bank rate hikes were a "necessary development", said International Monetary Fund chief Christine Lagarde.

During an event earlier Wednesday amid the sell-off, Trump and his top economic adviser, Larry Kudlow, said they believed the American economy was robust.

"The US tech bubble may take a while to burst and we are facing many external uncertainties - trade wars, risks in emerging markets currencies and oil price".

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE