Published: Tue, December 18, 2018
Markets | By Otis Pena

Fed Rate Hikes Extremely Rare When Stocks Plunge This Much

Fed Rate Hikes Extremely Rare When Stocks Plunge This Much

In a piece Tuesday titled "Time for a Fed Pause", the Journal urged the Federal Open Market Committee to forgo a rate hike amid a lack of inflation and a possible slowing in US economic growth.

"Take the Victory!" he added.

The US central bank has already raised interest rates three times this year, with many market commentators expecting the Federal Reserve to do so again before the new year.

Powell caused the stock market to rally November 28 when he added that he thought the Fed had taken rates to "just below" the so-called neutral rate of interest, which is a "Goldilocks" level that doesn't stimulate or contract growth.

The tweet was targeting the Federal Reserve that is expected to raise interest rates again as it was steadily doing as the economy was growing. Wages are also starting to increase in the United States, stoking fears that inflation could follow if interest rates remain so low.

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In recent months, Trump has lashed out at the Fed and its leaders, calling the central bank "loco" and "out of control" and saying he is "not even a little bit happy" with Powell, whom Trump appointed to the top job just over a year ago after he decided not to reappoint former Fed chair Janet Yellen, who is known to be cautious about rate hikes. The Fed says it is raising rates to return them to a more normal setting and avoid the type of boom-and-bust economy that ended in past recessions.

Mr. Trump's Monday tweet was one of several on issues facing his administration. Even with the increase, rates will remain near their historically low rates.

Nearly all economists expect the Fed to raise rates again at its meeting this week, while many also see the central bank making increases next year, although at a slower pace in the face of a possible economic recession. All eyes are on whether the central bank will slow down rate hikes amid expectations of an economic downturn next year.

But some Wall Street economists and analysts said that they did not see a major shift in Fed's tightening monetary policy.

With U.S. markets showing signs of volatility in recent weeks, Trump has chose to stay on offense, touting every victory he can find.

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