Declaring that "the Fed has gone crazy," Trump is increasingly targeting the US central bank

President Trump's decision to blame the Federal Reserve for Wednesday's stock-market drop significantly intensified months of public and private rumors about the central bank.

"I think the Fed has gone crazy," Trump told the press before a rally in Pennsylvania.

Trump seemed to be complaining that the central bank, headed by a president he had named several months ago, Jerome H. Powell, is gradually raising interest rates, which is normal when the The economy is growing stronger.

Trump stepped up his verbal attacks on the Fed, breaking with years of tradition in which US presidents and their advisers avoid commenting directly on Fed policy out of respect for central bank independence. Trump said he was worried the Fed's decision to raise rates would dampen economic growth, which he predicted would consistently exceed 3 percent during his tenure.

Until now, Trump does not seem to have acted beyond the increasingly acrimonious rhetoric to express his disapproval of the Fed's policy. Trump has named three of the four current members of the Fed's board of governors who, along with the Fed regional chairs, have set the interest rate policy.

Although Trump clearly wants the Fed to abstain from any hike, it's hard to decipher the exact meaning of his comments.

"I think the Fed is making a mistake," he said on Wednesday. "They are so tight. I think the Fed has gone crazy. So we can say, "Well, it's a lot of security." And it's a lot of security. And that gives you a lot of leeway. But I think the Fed has gone crazy.

In an otherwise highly controversial presidency, Trump announced that the strength of the economy was one of his greatest achievements. Tuesday, Trump has been touted by a New York Magazine reporter: "We have the largest economy in the history of our country."

On Wednesday, he anticipated the fall of the stock market, the Dow Jones industrial average having fallen by 831 points. "In fact, it's a correction we've been waiting for for a long time," said Trump.

Trump's comments about the Fed becoming "crazy" contrasted with a more measured statement from the White House on the strength of the economy.

Kevin Hassett, chairman of Trump's council of economic advisors, said on Tuesday that the president was speaking on monetary policy, but that he was not trying to "politicize" the Fed. Hassett highlighted the six nominees that Trump has so far named to the Fed's board of governors, all of whom have spent a lot of time in finance, banking or academia. Three have a doctorate in economics and three have a law degree. (Two are waiting for confirmation.)

"President Trump says he's saying what he thinks, but he respects the independence of the Fed and this is clear from his appointments," Hassett told the Council on Foreign Relations. "I think our candidates have been absolutely top notch."

Other economic leaders rejected the president's statement.

"I would not associate Jay Powell with madness. No, no, he falls on, and the members of his board are extremely serious, solid and eager to base their decisions on real information and decide to communicate them properly, "said Christine Lagarde, executive director of the board. International Monetary Fund, at a meeting of the IMF and World Bank in Indonesia, according to CNBC.

Trump has taken a number of steps this year to deepen the economy, including increasing federal spending. This follows a major tax reduction adopted last December. He avoided any criticism of the record deficit, tried to convince foreign leaders to lower oil prices and repeatedly attacked the central bank for raising interest rates.

Trump said he liked low interest rates, partly because of his real estate training. Higher interest rates make borrowing more expensive, allowing consumers or businesses to pause before getting a loan. This is often linked to higher borrowing costs for the federal government, which can scare investors.

Interest rates are rising. Fixed rate mortgages with a term of 30 years are now offered at an interest rate higher than 5%, which is significantly higher than when Trump took office.

Powell and Trump have not personally discussed the issue, said the Fed chairman, but Trump's rhetoric has alarmed some Democrats and Republicans of Capitol Hill. they have contacted the Fed leader to ensure there was no undue political interference.

Powell has repeatedly downplayed the president's comments, saying they had no impact on the Fed's decision-making process.

"We are completely away from the political process," Powell said in an interview last week at the Atlantic Festival in Washington. "We are just trying to make the right choice for the country in the medium and long term. We do not let other things distract us.

Both President Powell and the President have confirmed in recent days that they have not talked about interest rates. Powell defended the Fed's plans to raise interest rates gradually over the coming months, saying it was an appropriate policy in this "extraordinary" economic period.

A former Treasury official said that although Trump's comments are unusual, they do not seem to change the direction of the Fed. The Fed's main interest rate, the federal funds rate, is currently between 2% and 2.25%. The central bank raised interest rates three times this year and plans to do so again in December.

"It seems the Fed is continuing on the path expected by markets to raise interest rates given the tense labor market," said Phillip Swagel, senior treasury official under George W's administration. Bush. "That does not seem particularly surprising."

Trump chose Powell, a Republican who served in the George H.W. The Bush administration must lead the Fed on a number of candidates, many of whom advocated even more aggressive rate hikes. Treasury Secretary Steven Mnuchin had persuaded Powell, who was already a governor, to be a factor of stability.

But in August, Trump said he was "not happy" with Powell, although he pushed his critics much further back Wednesday when he said the Fed was " crazy woman".

Some of his former advisers said he believed Trump's criticism of the central bank was justified. Steve Moore, Trump's adviser to the 2016 campaign, said the central bank has traditionally raised interest rates to fight inflation, but did not suggest that inflation was threatening to hurt inflation. the economy.

"I agree with Trump on his criticism of the Fed that rising interest rates no longer seem necessary," Moore said. "Where is the inflation that they are fighting? Where is it?"

The stock market has risen sharply since Trump took office and the unemployment rate has fallen from 4.8% to 3.7%. Economic growth has improved and Republicans have taken steps to reduce taxes and regulations. Economic experts are divided over the period during which the economy will continue to thrive and some investors are convinced that many stocks, especially technology companies, are too expensive and must be downgraded.

But Trump loves touting good economic news and dismissing bad economic news or blaming it on the Fed.

In a sign of animosity that Trump now holds toward the central bank, Moore said he believed Trump was regretting appointing Powell to the post.

"I wonder today if Trump really has any regrets from the buyer about choosing Powell as chairman of the Fed because it was a strange choice," Moore said.

Heather Long contributed to this report.