Japanese stocks plunged by more than three percent Thursday following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.
"This is just who we are and I think who we will always be, which is, we're a group who - we're quite removed from the political process", Powell said in a recent interview.
"It is a correction that I think it is caused by the Federal Reserve, with interest rates", Trump told reporters at the White House. According to Trump, the Fed's interest rate increases this year have been "far too fast, far too rigid". The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.
Fed Chairman Jerome Powell is aiming to extend the second-longest US economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. "I think I know about it", he said.
Trump has said the Fed "has gone insane", and that the Fed was 'going loco' about rising rates.
The US stock market sell-off last night saw the S&P 500 and the Dow marking their biggest daily declines since February 8 with technology stocks at the centre of the falls.
Sarah Sanders' statement was correct, but it seems clear to us that the Federal Reserve leadership is not in sync with President's economic goals. For almost a decade after the 2008 financial crisis, the Federal Reserve's policy of low interest rates kept bond yields low, which hurt savers and those looking to diversify their portfolio.
Mr Trump doubled down on his attacks on the Federal Reserve Thursday, saying they were "making a big mistake" and were "out of control" in raising interest rates.
By historic standards, interest rates remain low. The central bank has hiked interest rates three times this year and expects to do so again in December.
The Tel Aviv Stock Exchange was down more than two percent, Shanghai plummeted almost 5% while Tokyo and Hong Kong both shed around 4%, as investors fretted about surging interest rates and the ongoing US-China trade war.
Last week's jump in yields followed strong USA data but many analysts have been anticipating a change in the dynamics in the bond market due to expectations that central banks in Europe and Japan will soon phase out bond-buying programmes.
The Treasury Department is due to release its semi-annual Exchange Rate Report this week amid reports that it will not name China as a currency manipulator, despite increasingly contentious exchanges between officials of the world's two largest economies. "But I really disagree with what the Fed is doing, okay?" As interest rates go up, bonds, not equities, are starting to look more attractive to investors. The president is not dictating policy to the Fed.
"They're being too aggressive", Trump said. "The problem in my opinion is Treasuries and the Fed".
Global economic leaders including International Monetary Fund head Christine Lagarde came to the Fed's defense, noting that the independence of monetary policy from the influence of elected officials has become a touchstone of effective economic governance, and helps prevent politicians from using cheap money to further their own interests [nL4N1WR3EY]. Meanwhile, Ford says that it anticipates about twenty thousand in layoffs and $1 billion in losses thanks to Trump's tariffs. And tech stocks got hit particularly hard.