Published: Thu, October 11, 2018
Money | By Ralph Mccoy

Trump calls stock selloff 'a correction,' says Federal Reserve is 'crazy'

Trump calls stock selloff 'a correction,' says Federal Reserve is 'crazy'

US President Donald Trump said yesterday's stock market selloff was in fact a long awaited "correction", and that the Federal Reserve, which has been raising US interest rates, has gone "crazy".

"The Fed is making a mistake", he told reporters on Wednesday as he arrived in Pennsylvania for a campaign rally.

"The Fed has gone insane", Mr. Trump told reporters while traveling to Erie, Pennsylvania, for a campaign rally. "Actually, it's a correction that we've been waiting for for a long time".

"I think it's good", Trump said of the stock decline. US consumer price inflation is now above 2 percent annually and the unemployment rate is the lowest in about 40 years.

White House Press Secretary Sarah Sanders said in a statement following the close of markets that the USA economy is "incredibly strong" despite the selloff, which analysts attributed in part to trade tensions with China. "That suggests the Fed will keep raising rates, and that's taking the wind out of the stocks that have done the most, particularly in the tech sector".

There are a slew of worries for investors which have been building in recent weeks.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong USA economy and solid corporate earnings.

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Those programmes - such as quantitative easing - are now ending and the Fed has raised United States interest rates three times already this year, raising borrowing costs, and could add a fourth hike by the end of 2018.

He said the rising appeal of bond investments would be a challenge for stocks in the foreseeable future as capital moves out of riskier equities.

Earlier on Tuesday, White House economist Kevin Hassett said the administration respects the Fed's independence and pointed to Trump's nominees to the central bank as evidence of its non-partisan approach to the setting of monetary policy.

Bourses in Paris and Frankfurt both lost more than two percent, while London fell 1.3 percent.

Markets have been shaken by a row between Brussels and Rome, which are at loggerheads after Italy's populist government passed a purse-busting budget last week to the annoyance of the EU. In Paris, shares in Kering fell almost 10 percent, LVMH over seven percent and Hermes around five percent.

In other markets, oil prices fell on worries that Hurricane Michael will dent demand for gasoline and other petroleum products.

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