Trump Renews Attacks On Federal Reserve, Causing More Market Chaos
President Donald Trump tore into the Federal Reserve anew Monday morning with a tweet complaining the central bank is “the only problem our economy has” and that its leadership does not understand how “necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders” work.
The president’s comments came as the S&P 500 fell Monday morning to the brink of bear market territory.
Trump has been complaining for months about Fed monetary policy, claiming rising interest rates are putting a brake on his economic plans. The president has also reportedly discussed firing Fed Chair Jerome Powell because of his frustration with stock market losses in recent months, although in a tweet Saturday, Treasury Secretary Steven Mnuchin quoted Trump as saying “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
The Fed last week raised its benchmark interest rate a quarter-point, the fourth increase this year and the ninth since it began normalizing rates in December 2015. It came despite Trump’s tweets urging against rate hikes. Two days earlier, he said “it is incredible” that “the Fed is even considering yet another interest rate hike.”
In the meantime, markets are down more than 12 percent this month, putting them on track for the worst December since the Great Depression, CNBC noted.
The Dow Jones Industrial Average dropped by 457 points Monday in volatile trading. The Dow sank more than 2 percent down, then recovered nearly all of the day’s losses, before again falling more than 2 percent. The S&P 500 fell 1.8 percent and Nasdaq Composite Index slid 1.2 percent.
Last week the Dow lost 1,655 points, or 6.8 percent. That was the Dow’s worst week of trading since October 2008 during the financial crisis. The S&P 500 also lost 7 percent for the week and is now down 17.8 percent from its record reached earlier in the year. Wall Street traditionally considers a drop of 20 percent or more from recent highs to be a bear market.. The Nasdaq Composite is now 22 percent below its record reached in August and is in a bear market.