‘I think the Fed is making a mistake. It’s so tight, I think the Fed has gone crazy’
Donald Trump, president of the United States
That’s the view President Donald Trump shared of the Federal Reserve on Wednesday in the wake of a virtual bloodbath on Wall Street that resulted in the worst daily decline for the Dow Jones Industrial Average DJIA, -0.66% and the S&P 500 index SPX, -0.75% since both U.S. equity benchmarks tumbled into correction territory back in early February. The Nasdaq Composite Index COMP, -0.07% , meanwhile, suffered its ugliest day since U.K. voters exhibited a narrow preference for a market-disrupting plan to exit the European Union’s trade bloc back in June 2016.
In all, it was a withering session for an administration that has closely watched stock-market performance and views it, at least partly, as a gauge of the success of its economic policies, including corporate tax cuts and deregulation.
However, those efforts, in Trump’s stated view, are imperiled by the policies of the Fed, which has raised interest rates three times this year and has signaled its intention to do so a fourth time before year-end.
International Monetary Fund managing director Christine Lagarde dismissed Trump’s comments Thursday. “I would not associate [the Fed chairman] Jay Powell with craziness,” she told CNBC at the IMF and World Bank annual meetings in Bali, Indonesia.
Trump’s comments, made before a rally in Erie, Pa., on Wednesday, are an escalation of previous criticisms that he has leveled against the Fed and Powell, whom Trump appointed to the chairman role over incumbent Janet Yellen. Reuters reported in late August that Trump was “not thrilled” with Powell, whom he said he’d thought would provide “more help.”
Trump also complained to donors at a Hamptons fundraiser that Powell hasn’t