Lagarde defends rate hikes after Trump's Fed attack

  • Lagarde defends rate hikes after Trump's Fed attack

Lagarde defends rate hikes after Trump's Fed attack

In comments to the press in Erie, Pennsylvania, Trump said, "I think the Fed is making a mistake". "The Fed is going wild".

Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies of $110 billion of American products.

The Tel Aviv Stock Exchange was down more than two percent, Shanghai plummeted almost 5% while Tokyo and Hong Kong both shed around 4%, as investors fretted about surging interest rates and the ongoing US-China trade war.

Trump's remarks to reporters were in direct response to questions about the stock market drop. "It's all about investors rethinking their exposure to stocks."Many of the biggest U.S. names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than four percent and Amazon, Nike and Microsoft shedding more than five percent". Fed officials including Powell, Trump's handpicked chair, have said pointedly that they will not be influenced by comments from elected officials, and will make decisions based on economic data.

But the Federal Reserve has been gradually raising its interest rates since 2015, bringing the target for its benchmark rate to a range of 2% to 2.25% last month. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.

"I think it's good", Trump said of the stock decline.

In a brief interaction with reporters and later in comments to Fox News, Trump said the U.S. central bank was "too aggressive" in raising interest rates. And I have a lot more to do if I want to do it and I don't want to do, but they have to come to the table.

Powell's goal is to extend the second-longest US 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.

"Later, White House Press Secretary Sarah Sanders said the fundamentals and the future of the U.S. economy remain incredibly strong".

Seoul fell more than 4% and Sydney and Singapore both dropped more than 2.5%.

The Dow plunged almost 832 points on Wednesday, the third-worst point decline in history.

The yield on the 10-year US Treasury note has risen to around 3.1 per cent from around 2.1 per cent over the past year.

But one unintended effect is that raising interest rates can scare off investors and precipitate a sell off in equities.

Dramatic and sustained stock market declines can feed into that outlook through a "wealth effect" if they begin to erode household and business confidence, and prompt consumers and investors to curtail spending.