US President Donald Trump has said his trade policies have hurt China's economy, adding: "I have a lot more to do".
But one unintended effect is that raising interest rates can scare off investors and precipitate a sell off in equities.
She recommended more flexibility on capital flow management, adding that some emerging markets, including South East Asian countries, had been far too reluctant to ramp up capital controls to protect their own economies. "But I really disagree with what the Fed is doing, okay?" he said.
One former Treasury official said while Trump's comments are unusual, they don't appear to be changing the Fed's direction.
Trump said the market plunge is "a correction that I think is caused by the Federal Reserve". But the remarks are a sharp departure from Trump's recent predecessors.
Powell has repeatedly downplayed the president's comments, saying they have no impact on the Fed's decision-making. Presidents for more than two decades had avoided public comments on the Fed's interest-rate policies as a way of demonstrating respect for the institution's independence.
"He has never attacked the Fed's plan or strategy", Kudlow told reporters on the White House lawn. "He is giving his opinion, and it's an informed opinion".
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"The four per cent drop in the S&P 500 so far this week suggests that investors are starting to factor in the prospect of the US economy slowing in response to tighter monetary policy", he wrote in a research note on Thursday.
Managing Director of International Monetary Fund (IMF) Christine Lagarde talks during a press conference ahead of the annual meetings of the IMF and World Bank in Bali, Indonesia on October 11, 2018. The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than $500 billion in goods the USA bought from China previous year.
"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. Powell said last week he expects to stick with the current path of gradual interest-rate hikes while monitoring risks in the economy.
Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.
The Fed has raised rates three times this year and is expected to push through another rise by the end of December, with three more planned in 2019. Higher interest rates makes it more expensive to borrow money, giving consumers or businesses pause before taking out a loan.
Powell and Trump haven't personally discussed the matter, the Fed chair has said, but Trump's rhetoric has alarmed some Democrats and Republicans on Capitol Hill.
Analysts attribute some of the recent share price declines to sales by investors anxious that trade tensions will hurt growth, while trade tariffs and rising interest rates raise costs for businesses.