Published: Thu, October 11, 2018
Markets | By Otis Pena

Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

Japanese stocks plunged by more than three percent Thursday following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates. "So you can say that well that's a lot of safety actually, and it is a lot of safety, and it gives you a lot of margins, but I think the Fed has gone insane". "They're so tight. I think the Fed has gone insane", Mr. Trump told reporters after landing in Erie, Pa., for a political rally.

A stock market correction is defined as a decline of at least 10% from the high point of the past 52 weeks, suggesting that major USA indices have further to fall.

The Dow Jones Industrial Average plummeted 832 points on Wednesday, recording its largest single-day point drop since February. The Fed is doing what it thinks is necessary, but I don't like what they're doing because we have inflation really checked and we have a lot of good things happening.

The sell-off came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets. "I just don't think it's necessary to go as fast".

The Federal Reserve sets baseline interest rates for lending standards, which can have a massive effect on whether businesses expand or contract.

The benchmark Nikkei 225 dropped almost two percent at the open and extended losses to below the three-percent mark, as traders fretted about surging interest rates and an ongoing trade spat. The Fed policy has been criticized by President Donald Trump.

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He said he didn't think the current rate of U.S inflation merits higher borrowing costs.

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation".

White House Press Secretary Sarah Huckabee Sanders said in a statement following the close of markets that the US economy is "incredibly strong" despite the sell-off.

Mr. Trump said earlier this week that he thought the central bank was moving too quickly with a series of planned interest rate hikes.

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

In September, the Fed raised interest rates by 25 basis points for the third time in 2018, raising the target range for its benchmark rate to 2%-2.25%. "President Trump's economic policies are the reasons for these historic successes and they have created a solid base for continued growth".

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