The Dow Jones dropped by more than 800 points on Wednesday in one of the worst days for the stock market since February, and President Donald Trump had an explanation ready when asked by reporters.
"I think the Fed has gone crazy"
The president told reporters Wednesday that he believed the drop was a correction, and that the Federal Reserve Bank was to blame for raising interest rates.
"No I think the Fed is making a mistake," he said. "They're so tight. I think the Fed has gone crazy."
"So you could say that well, that's a lot of safety actually and it is a lot of safety and it gives you a lot of margin," he added. "But I think the fed has gone crazy."
"Actually it's a correction that we have been waiting for, for a long time," he continued. "But I really disagree with what the fed is doing. OK?"
The Dow Jones stock market average dropped by 831 points, which is 3.15 percent of its opening value on Wednesday. Although the drop was unusually large, the stock market has been on a historic run of gain since the president's inauguration.
The Federal Reserve sets baseline interest rates for lending standards, which can have a massive effect on whether businesses expand or contract. Economists generally agree that in order to prevent runaway inflation, the Federal Reserve can raise interest rates to restrain the money supply.
But one unintended consequence is that raising interest rates can scare off investors and precipitate a sell off in equities.
"I am not happy about it"
In July, the president complained about the Federal Reserve raising interest rates.
"I’m not thrilled because we go up," he explained, "and every time we go up they want to raise rates again, and I don’t really — I am not happy about it, but at the same time I’m letting them do what they feel is best."
Here's the video of Trump's comments about the Fed:
Trump previously criticized the Fed for allowing too much money into the economy in several tweets from 2011, before he became the president.
"The Fed continues to flood the market with US dollars," he said in one tweet. "Wrong move."
The Fed continues to flood the market with US dollars. Wrong move.— Donald J. Trump (@Donald J. Trump)1313004381.0
"The Fed's reckless policies of low interest and flooding the market with dollars needs to be stopped or we will face record inflation," he said in the other.
The Fed's reckless policies of low interest and flooding the market with dollars needs to be stopped or we will face record inflation.— Donald J. Trump (@Donald J. Trump)1317324244.0
Wednesday evening, lower futures indicated that the Dow Jones would fall even further on Thursday when the exchange opened.