US President Donald Trump criticized the Federal Reserve’s decision to continue increasing interest rates, stating the US central bank has “gone crazy.”
“I think the Fed is making a mistake. It’s so tight. I think the Fed has gone crazy,” Trump told reporters Wednesday in Erie, Pennsylvania, where he had come for a campaign rally.
Fears of rapidly rising interest rates were one factor contributing to the Dow Jones Industrial Average dropping more than 800 points Wednesday, according to a CNBC report. The S&P 500’s daily decline Wednesday marked the worst day for the stock index since February. In general, US shares suffered a broad-based selloff that slashed more than 3 percent from major indices, AFP reported.
However, the president also downplayed the effect the Federal Reserve’s decision to raise interest rates.
“Actually, it’s a correction that we’ve been waiting for for a long time, but I really disagree with what the Fed is doing,” the president added.
In terms of the stock market, a “correction” is defined as a fall of at least 10 percent from the high point of the last 52 weeks, Reuters notes. Market corrections tend to be followed by a continuation of the bull trend.
The stock market drop is likely particularly unpleasant for Trump, who has repeatedly used growing Wall Street numbers as proof of the success of his economic policies, which include controversial tariffs, AFP notes, adding that Trump’s own policies contributed largely to the interest rate increases, as tax cuts and spending policies are expected to juice the US economy, providing justification for the jump in rates. At the same time, Trump’s trade wars increased costs for companies, delivering a blow to quarterly earnings — something that some experts say contributed to the Wednesday selloff.
The White House also commented on the issue, saying President Donald Trump’s policies have created a solid base for growth and the future of the US economy remains strong despite a major drop in the stock market
“The fundamentals and future of the US economy remain incredibly strong,” White House Press Secretary Sarah Sanders said when asked about Wednesday’s market drop. “President Trump’s economic policies… have created a solid base for continued growth.”
Trump is a longtime critic of the Fed’s policy of higher interest rates. Back in July, he said he was “not thrilled” with the interest rate hikes, as they threatened to nullify the the economic stimulus his administration has tried to implement through moves such slashing the corporate tax rate to 21 percent from 35 percent, according to Yahoo Finance.
Earlier in September, when the Fed announced its third rate increase of the year, Trump also said that he didn’t “like it.”
“I think we don’t have to go as fast,” he said at the time. “I like low interest rates.”