President Donald Trump on Thursday escalated his attack on the Federal Reserve's interest rate increases, asserting that "the Fed is out of control" and blaming it for this week's plunge in stock prices.
United States presidents have typically avoided commenting on the Federal Reserve's moves, wary of violating the Fed's independence. "I think the Fed has gone insane".
Higher interest rates tend to moderate economic growth and makes borrowing more expensive for the USA government as well as businesses and consumers. "I like to stay uninvolved", Trump said.
But it amounts to good news for the long-term direction of the economy. Still, while many investors might not concur with Dr. Trump's diagnosis, they might tend to agree with the underlying sentiment: US interest rate hikes are or are going to rain on the stock market's parade. And considering that the dividend yield of the S&P 500 is below two per cent, stocks might start to look less attractive to investors; a risk-free 3.2-ish return could be too juicy to resist.
Powell and Trump haven't personally discussed the matter, the Fed chair has said, but Trump's rhetoric has alarmed some Democrats and Republicans on Capitol Hill.
The Republican president told the presenters: "They're [Fed bankers are] making a big mistake".
Trump's latest criticism of the Federal Reserve gave investors another headache. "Certainly we have advocated that in all countries, and I think that the Fed is no exception", said Lagarde.
Google Plus to shut down after massive data breach
The Google Plus security blunder could still give the US Congress a reason to enforce tighter laws surrounding data collection. Going forward, Google could face legal action for its failure to report the security breach to the public.
It's stressful to watch the big market swings, but everything will probably beall right if Fed Chairman Jerome H. Powell keeps doing the right thing by shrugging of Trump's tweets.
"That is join the global stock market on the way down", said Gundlach, whose Los Angeles-based firm oversees about $123 billion.
The Federal Reserve issued no new comment in response to the president's remarks.
One reason why the Fed has been raising interest rates even with little sign of an inflation breakout is because the unemployment rate, which fell to 3.7 percent in September, is at a level that many officials expect will cause wage and price gains to accelerate over time.
Trump's politicking with interest rates has the potential to backfire.
Trump has been publicly criticizing the Federal Reserve - led by Chairman Jerome Powell, whom he appointed - since July for interest-rate increases and declared he was "not happy" in September after the third rate hike of the year. 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.
Analysts attribute some of the recent share price declines to sales by investors anxious that trade tensions will hurt growth, while trade tariffs and rising interest rates raise costs for businesses. He was persuaded by Treasury Secretary Steven Mnuchin that Powell, who was already a Fed governor, would be a force for stability. And tech stocks got hit particularly hard. He has repeatedly criticized the central bank for raising interest rates this year, decisions aimed at preventing the economy from overheating. I don't know what their problem is.