Trump says market drop is 'correction that we've been waiting for'

Trader Gregory Rowe works on the floor of the New York Stock Exchange Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp declines in technology stocks. (AP

Trump says market drop is 'correction that we've been waiting for'

President Trump took aim at the Federal Reserve this week, saying the USA central bank had "gone crazy" by raising interest rates too quickly, sparking backlash among prominent leaders in the business and economic communities.

"I think the Fed is making a mistake", Trump said to reporters after landing in Erie, Pennsylvania, for a campaign rally on Wednesday. "I think our nominees have been absolutely first rate".

"I really disagree with what the Fed is doing", Trump 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 Fed has been raising interest rates gradually since December 2015, and last month lifted its target for short-term rates to a range of 2 per cent to 2.25 per cent, responding to an economy that has been growing at a pace well above what Fed officials believe is sustainable.

Trump has said he likes low interest rates, in part because of his background in real estate.

Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.

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.

"I'm paying interest at a high rate because of our Fed", he added, referring to the cost of servicing the U.S. deficit. Economists generally agree that in order to prevent runaway inflation, the Federal Reserve can raise interest rates to restrain the money supply.

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Past US presidents have criticised the central bank, but the recent run of invective was unusual even for Trump.

Fed spokeswoman Michelle Smith declined to comment on Trump's remarks.

The governors of the Bank of England and South Africa also came to Powell's defense during the same meeting.

Inflation, which had been worrisomely low in Mr Evans' view, is now at the Fed's 2-per cent target.

"They lived too well for too long", Trump said of the Chinese during his Fox News interview.

Stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above three percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve rate hikes.

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

Meanwhile, Europe's main stock markets slid by around 1.5% at the start of trading today following heavier falls across Asia and on Wall Street overnight.

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