TRUMP: The Fed is the 'biggest threat' to the economy

Carlos Barria/Reuters

President Donald Trump stands behind President Donald Trump

• President Donald Trump attacked the Federal Reserve once again on Tuesday during an interview with Fox Business.
• "My biggest threat is the Fed, because the Fed is raising rates too fast", Trump said.
• Trump has recently waged a sustained campaign against the Fed, calling their interest rate hikes "crazy" and "loco."

President Donald Trump on Tuesday went after the Federal Reserve with some of his harshest language yet during a Fox Business Network interview.

Trump claimed that the biggest problem facing the US economy and stock market is the Fed's path of interest rate hikes under Chairman Jerome Powell. The central bank has been increasing interest rates for close to the past three years.

"My biggest threat is the Fed, because the Fed is raising rates too fast," Trump told Fox Business host Trish Reagan. "And it's independent, so I don't speak to them, but I'm not happy with what he's doing because it's going too fast. Because you looked at the last inflation numbers - they are very low."

The Fed's interest rate increases theoretically make it more expensive for businesses and companies to borrow money from banks. This decreases the amount of capital flowing around the financial system and eventually curtails economic growth. Interest rate hikes are also thought to curtail price increases and prevent runaway inflation.

But the Fed is currently increasing interest rates from the 0% level - a historic low set during the financial crisis - and many indicators of lending remain loose. So while the Fed appears to be moving toward a position that could curtail growth, it's unclear if the central bank is there yet.

Even the threat of a possible headwind to economic growth, however, has provoked Trump into a series of attacks on the Fed and Powell.

Over the past few decades, presidents have typically refrained from commenting on the Fed's interest rate policy, since the central bank is independent and presidential pressure on the Fed typically ends in disaster. But as with many other aspects of the office, Trump has broken tradition.

In recent weeks Trump railed against the Fed, saying the central bank "has gone crazy" and calling their interest rate hikes "loco."

"I really disagree with what the Fed is doing," Trump told reporters October 10 in Pennsylvania.