Fed's interest rate increases 'don't have to go as fast'


Those financial crisis-inspired 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.

"The Fed has an independence that it needs to pursue, it's concerned about inflation - and right now we have tariffs, which are wreaking havoc, we're not sure to what extent, and an exploding deficit ..."

"I think I know about it better than they do", Mr. Trump said, again criticizing Fed interest-rate hikes.

Jasper Lawler, head of research at London Capital Group, offered this explanation: "The bloodbath for global equities comes as investors adjust to a world of higher U.S. interest rates and USA treasury yields". The Fed's effort to shrink its balance sheet is creating added uncertainty, since it's unclear how the central bank's reduction in its bond portfolio will affect markets, he said.

"I wonder today whether Trump really has some buyer's remorse with respect to selecting Powell as his Fed chairman, because that was a unusual pick", Moore said.

White House officials, including Mr Trump, have dismissed the declines as standard corrections after a long run of rising share prices.

"That's ridiculous what they're doing, " Trump told Fox News on Thursday morning.

In previous years, financial markets have been doubtful that the Fed would follow through with its forecasts for rate increases.

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Global stock markets fell again on Thursday as investors anxious about signs of slowing growth, rising trade tensions and higher interest rates.

Inflation, which had been worrisomely low in Mr Evans' view, is now at the Fed's 2-per cent target. "No, I think the Fed is making a mistake".

"He has never attacked the Fed's plan or strategy, " Kudlow told reporters on the White House lawn Thursday. "He is giving his opinion, and it's an informed opinion".

A bear market by many definitions requires a drop of at least 20% in the S&P 500 from a bull-market peak; likewise, a bear market starts counting at a 20% rise out of a deep trough.

The IMF's latest report on world financial stability, released Wednesday, said global growth could be at risk if emerging markets deteriorate further or trade tensions escalate.

Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies of $110 billion of American products.

"But I think the Fed has gone insane", he went on. The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than $500 billion in goods the US bought from China a year ago. Some $50bn was wiped off values in Australia on Thursday and futures trading suggested more falls to come.

Trump on Thursday also indicated that the Fed's policies were harming him personally. This implies they now see a greater possibility that growth and short-term interest rates could surprise by rising faster than forecasters now project. Higher interest rates could increase his debt payments considerably.