'The Fed has Gone Crazy': Trump Sounds the Alarm Despite White House Assurances After Stock Market Plummets
President Donald Trump's favorite index of his supposedly successful term in office, the stock market, plummetted Wednesday when the Dow Jones lost a stunning 832 points — the third worst drop in points for a single day ever.
This dramatic event was met by two distinct responses: The official, measured response from the White House press office — and also the frantic response from the president himself.
“The fundamentals and future of the U.S. economy remain incredibly strong," said White House Press Secretary Sarah Sanders. "Unemployment is at a fifty year low, taxes for families and businesses have been cut, regulations and red tape have been slashed, paychecks are getting fatter, consumer and small business confidence are setting records, and farmers, ranchers and manufacturers are empowered by better trade deals. President Trump’s economic policies are the reasons for these historic successes and they have created a solid base for continued growth."
When reporters asked Trump himself about the drop, however, he said: "I think the Fed is making a mistake. They’re so tight. I think Fed has gone crazy."
Trump was referring to the fact that the Federal Reserve, led by his appointee Chair Jerome Powell, has carried out a policy of continuing to steadily raise interest rates, which can reduce borrowing and dampen inflation. Observers believe that fear of higher long-term rates spooked investors and caused the day's downturn.
He added: “Actually, it’s a correction that we’ve been waiting for, for a long time. But I really disagree with what the Fed is doing, okay?"
Trump has previously broken with the tradition of presidents' refraining from commenting on the independent agency's decisions. But his latest criticism — saying the Fed is "crazy" — is an even more radical step and an extreme assessment of its decisionmaking. While many observers have criticized Fed officials for being too eager to raise rates and keep inflation low, there's nothing erratic or nonsensical about its decisions.
Rather than an objective reaction to the Fed's policies, Trump remarks Wednesday were likely driven by fears that any negative economic news could hurt his messaging in the runup to the 2018 midterm elections.