Central Bankers Defend Fed After Trump Accuses It of ‘Going Loco’

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Higher rates also erode profits for companies, which have to pay higher interest costs.

That would require the Fed not to be neutral but more restrictive, he added. "The fed is going loco".

But in August, Trump said he was "not thrilled" with Powell, though he took his criticism much further on Wednesday when he said the Fed was "crazy". "I think the Fed has gone insane", the president said after walking off Air Force One in Erie, Pennsylvania for a rally.

Trump's latest attack on the USA central bank appeared to blame the Federal Reserve for a stock rout that market analysts mostly attributed to fresh concern about his trade war with China. "The president is concerned about the Fed raising interest rates too much and slowing down the economy and those are obviously natural concerns", Mnuchin said in a CNBC interview from the International Monetary Fund meeting in Bali, Indonesia.

"If you're going be anxious about a White House that was going to try to politicize the Fed, then you can think of other people that they might put there besides the people that we choose", Kevin Hassett, chairman of the White House's Council of Economic Advisers, said at the Council on Foreign Relations on October 9.

"I think we don't have to go as fast", Trump reportedly said.

"Actually it's a correction that we've been waiting for a long time, but I really disagree with what the Fed is doing", Trump told reporters before a political rally in Pennsylvania.

Domestically, the 30-year low in the unemployment rate is finally leading to wage pressure and that will pose problems for earnings in an overvalued stock market, added Roach, who served as Morgan Stanley Asia chairman for five years.

Mnuchin, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Bali, also said that Chinese officials had told him that they did not want to see a further depreciation of the yuan's exchange rate, an issue that the USA has been very concerned about.

Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies such as the European Union.

Despite a booming United States economy, low inflation and low unemployment, investors are concerned about rising bond yields that have been drawing money out of the stock market, and increased USA interest rates.

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Money Map Press chief strategist Keith Fitz-Gerald, Fox Business correspondent Kristina Partsinevelos and Capital Wave forecast editor Shah Gilani discuss President Trump's criticism of the Federal Reserve.

Interest rates have been on the rise over the past several weeks, with the benchmark 10-year Treasury note - a barometer for corporate debt and mortgages rates - climbing to its highest level in more than seven years.

Michelle Smith, a Federal Reserve spokeswoman, declined to comment on Trump's remarks.

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.

The unemployment rate in September dipped to 3.7 percent, a level not seen in almost half a century, while an inflation report on Thursday indicated the pace of price increases remained under control around the Fed's target.

Under the guidance of Powell, Trump's pick to lead the central bank, and his predecessor Janet Yellen, Fed officials have raised rates six times since Trump's inauguration in January 2017.

Among investors in federal funds futures, continued Fed rate hikes remained a solid bet, with a December increase assigned a 78 percent probability - down only 3 percentage points from before Wednesday's market turmoil and Trump's comments.

White House Press Secretary Sarah Sanders said in statement that the fundamentals of the U.S. economy remain strong thanks to the administration's business-friendly policies.

However, some investors - and now Trump - are anxious that the Fed is unmoved by the red flags popping up in financial markets and some corners of the economy.

"The fundamentals and future of the US economy remain incredibly strong", Sanders said in a statement.

Both Powell and the president confirmed in recent days that they have not spoken to each other about interest rates.

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