President Donald Trump said he won't fire Federal Reserve Chairman Jerome Powell but blamed an "out of control" us central bank for the worst stock market sell-off since February. "They're so tight. I think the Fed has gone insane", Trump told reporters on the tarmac in Pennsylvania.
The Fed has said strong economic performance in the USA means that the ultra-low rates put in place to spur economic activity after the 2008 financial crisis are no longer necessary.
"The fundamentals of the U.S. economy continue to be extremely strong, I think that's why the stock market has performed as well as it has", U.S. Treasury Secretary Steven Mnuchin told Bloomberg News at the IMF's annual meeting in Bali, Indonesia.
Trump blamed the Federal Reserve for the global stocks rout that continued Thursday for a second day amid concerns about rising interest rates.
"I don't like it", Trump said Tuesday at the White House, referring to the Fed's rate hikes, the most recent of which was September 26.
The comments followed his strongest criticism of the Fed late Wednesday when he said the central bank had "gone insane". The Federal Reserve is the agency with the biggest sway over the economy.
Even so, one reason why the Fed has been raising interest rates even with little sign of an inflation breakout is because the unemployment rate, which fell to 3.7 per cent in September, is at a level that many officials expect will cause wage and price gains to accelerate over time.
But, crucially, the higher long-term interest rates don't seem to be driven by expectations that inflation will soar higher.
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But it's "inevitable" to expect central banks to be tightening monetary policy at a time when their economies are doing well, said Lagarde. (See also: The 2007-2008 Financial Crisis In Review). (See also: Dissecting The Bear Stearns Hedge Fund Collapse).
The Fed has raised rates three times this year and is expected to push through another rise by the end of December, with three more planned in 2019. Coupled with those hikes is an aggressive stance indicating that the federal agency might not be averse to further rate increases in the future.
"I find myself in general agreement with Trump on his criticism of the Fed, which is that raising interest rates now doesn't seem necessary", Moore said.
Naeem Aslam, chief market analyst at Think Markets, said: "We have not experienced anything like this since Brexit and if you look at the Nasdaq, it becomes clear that the sell-off was actually triggered by the technology stock".
Gradual rate increases - moving the overnight federal funds rate over the next year and a half or so from between 2 and 2.5 percent now to around 3.4 percent - would slow the economy a bit, but keep inflation in check during a record-setting era of recession-free growth spanning the Obama years and Trump's first term.
Experts from JP Morgan Chase International have publicly backed the Fed's moves. "The Fed has gone insane".
"He is an individual that really understands the plumbing of the US and global financial systems and one example is the reforms that are going underway on Libor for which he is one of the main sponsors", said Carney. "I would not associate Jay Powell with craziness", she said. "The fact that there's somewhat of a correction given how much the market has gone up is not particularly surprising".