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Steven Mnuchin opposed the President Donald Trump for Fed

Steven Mnuchin

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The US Secretary of the Treasury, Steven Mnuchin, opposed the President Donald Trump, stating that the Federal Reserve is not responsible for the Wall Street crash.

“Markets are rising and markets are falling”, said Steven Mnuchin, defining the recent drop on Wall Street as an adjustment.

Wall Street experienced a black day on Wednesday and the declines extended on Thursday. The three major indexes on the US stock markets closed with strong decline, with Dow Jones Industrial Average losing 1,200 points for the two days. The investors reacted to a report by the International Monetary Fund, which warns of dangers to financial markets amid rising interest rates in the United States and the controversy over the dues triggered by Trump.

The US President Donald Trump said shortly afterwards that Wednesday’s sell-offs was actually a long-awaited adjustment. However, he criticized the Federal Reserve, describing the central bank’s actions as “madness”.

“I think … Fed is making a mistake. They are too tight. I think the Fed is crazy”, said Donald Trump.

With his repeated criticism of Fed, Donald Trump broke down a tradition that American presidents do not interfere with the work of the independent central bank. And the Republican has already announced that he will again be critical if the Federal Reserve continues on its way to tighten the monetary policy.

However, the charges do not hinder the Federal Reserve Chairman Jerome Powell for the time being.

“When deciding on monetary policy, political factors do not play any role”, said he after the latest decision to raise interest rates in September.

This attitude is considered by experts as crucial to Fed’s credibility. This is illustrated by the example with Turkey, where serious criticism by President Recep Tayyip Erdogan raises doubts about the independence of the central bank and contributes to the currency crisis.

The US central bank has already raised the benchmark interest rate three times in 2018, the last time from 2% to 2.25%. By the end of 2019, four more hikes are expected.