Lawmakers and Wall Street Highlight Fed's Increasingly Important Attacks by Trump

GOP legislators downplay President TrumpDonald John TrumpDave Chappelle: Trump's address to a very small choir in an "eclectic" country Three reasons why Mueller refuses to charge Trump with obstruction The Alabama grocery store says he does not sell Pepsi products bearing the NFL logo to counter knee manifestations MOREThe escalating attacks by the Federal Reserve against the Federal Reserve, claiming that his comments are unlikely to influence central bank decision makers, many of whom have been appointed by Trump.

Capitol Hill Republicans said that if they disapproved of the content of Trump's words, they supported his right to break with decades of precedent in the White House by publicly criticizing the Fed, an entity that fiercely protects its independence from politics.

On Wednesday, the president accused the Fed of the sharp fall of the stock market, telling reporters that the central bank "went crazy" and "made a mistake" with its "ridiculous" rate hikes. Later in the day, he said the Fed "is going wild."

Sen. Mike RoundsMarion (Mike) Michael RoundsGOP unveils a critical study on global warming. The Senate GOP is waiting for the FBI report on Wednesday afternoon. (R-S.D.), Member of the Senate Banking Committee, said Trump was only expressing his opinion.

"I have no objection to him sharing his thoughts on this, just as we all like to share our thoughts on this," Rounds said. "I do not think it will pose a challenge to the Fed's independence."

In July, Trump broke the White House's silence on the Fed's monetary policy for two decades by stating that he was "not thrilled" with the rise in interest rates. The following month, he made similar remarks, but also expressed his dissatisfaction with President Jerome Powell. Trump has appointed Powell to replace the former Fed chief Janet YellenJanet Louise YellenOn The Money: McCarthy Proposes Bill to Fully Fund Trump Border Wall | US to put pressure on China on currency in trade talks | Mnuchin plans to go ahead with a trip to Saudi Arabia | Dems Trump accuses the Fed of the collapse of the market, but could be angry. Trump says he's not happy with the Fed's latest rate hike. MORE, named by the Obama era.

Trump intensified its attacks last week as the stock market slid sharply on Wednesday and Thursday. He explicitly blamed the Fed, which raised interest rates to historically neutral levels.

"I do not know what their problem is," Trump said Wednesday night.

His remarks only raised eyebrows on Wall Street and the market did not seem to move in response to the president's comments.

Karen Petrou, managing partner of Federal Financial Analytics, said it was "fascinating … how much the US markets immediately immediately took into account what the president had said."

She stated that the yawning reaction on Wall Street was probably a sign that traders "get used to it by saying a lot of things that no president has said before and that they have confidence in the strength and independence of the Fed. "

Sen. Sherrod BrownSherrod Campbell BrownMorning, Hill's Report – Presented by PhRMA – Dem's victories in 18 will not appease party turbulence Democrats fight to mobilize Latino voters | Take away from the Tennessee Senate debate | Poll places Cruz in 9th place in Texas Poll: Cordray leads DeWine by 6 points in the Ohio Governor's race PLUS (Ohio), the largest Democrat on the Senate Banking Committee to be re-elected this year in a state Trump won in 2016, said Trump's attacks on the Fed were a symptom of his style of government.

"People are so used to that the president comments everything, criticizes everyone else and points fingers – it's always someone else's fault – of course, he's going to do it ", did he declare.

Unlike previous presidents, lawmakers have criticized the Fed throughout its history. A 2016 measure sponsored by Sen. Rand PaulRandal (Rand) Howard Paul Five Things to Watch for in the Deterioration of US-Saudi Relations Kavanaugh opposes the GOP's awakening, but more is needed. Senators warn Trump that relations with Arabia are at stake MORE (R-Ky.) To audit the Fed came in the seven votes of Senate adoption.

But GOP supporters of the effort, which would have increased government control of the independent institution, said they respected the Fed's independence and did not think Trump was trying to undermine the bank.

Chairman of the Banking Committee Mike CrapoMichael (Mike) Dean CrapoGOP sets fire to the dust as control of the House changes course, Republicans change course after endorsement by a GOP Senator's legal advisor calling Ford "credible". (R-Idaho) said Trump's critics would not influence the Fed, but he declined to say whether it was appropriate for the president to blow up the bank.

The predecessor of Crapo as chairman of the banking committee, Sen. Richard ShelbyRichard Craig ShelbyFlorida: Politics plays a role in the disaster relief debate On The Money: Trump signs a spending bill to prevent arrest | House votes to extend individual tax cuts | Tesla shares its record after the SEC accused Musk of fraud. Trump signs spending bill to prevent closure of his position PLUS (R-Ala.), Said he was confident that the Fed will follow the data, not Trump.

"Price stability is important to us all, so let's see what the Fed does, how it does it," said Shelby. "But they probably have information that we may not have."

For nearly four decades, the Fed has been mandated by Congress to "effectively promote maximum employment goals, stable prices and moderate long-term interest rates."

Most Republicans are eager to see the Fed neutralize interest rates, with unemployment falling to a record high and inflation starting to increase. But Trump criticized the Fed for increasing its borrowing costs, saying the rate hikes had the effect of suppressing the stock market, its preferred measure of economic success.

Stock markets have recorded significant gains since Trump took office, and analysts say they are ready for a correction. While higher interest rates are weighing on the markets, traders have also been shaken by the long trade war between the United States and China.

"The stock market is [Trump’s] economic report, so if he is in the red, he falls, and he will do everything in his power to go green, "said Mark Zandi, chief economist at Moody's Analytics.

"Investors expect what the president says. They do not give any importance to his criticism and protests, "said Zandi, adding that investors had already anticipated the rate hike expected in December by the Fed.

Trump has few options for influencing the Fed even though he decided to act. The law prohibits the president from dismissing the president of the Fed for reasons other than extreme misconduct, and it is unlikely that Republicans will support Fed candidates considered as friends of the president.

"It's a lot of noise, but at the end of the text, nothing substantial," Zandi said. "He will not try to replace Powell or bend the Fed to his compatriots."