By Nick Timiraos 

WASHINGTON -- President Trump lashed out at the Federal Reserve for not cutting interest rates more aggressively after fears about a global-growth slowdown rippled through financial markets Wednesday.

Mr. Trump said the Fed, not his trade standoff with China, was to blame for recent signs of economic weakness. "We are winning, big time, against China...Our problem is with the Fed," he said on Twitter Wednesday.

Mr. Trump also said Fed Chairman Jerome Powell was "clueless."

The comments came amid a sharp selloff in stocks, with the Dow Jones Industrial Average dropping about 800 points, or 3.05%, after reports of weaker economic growth earlier Wednesday in Germany and China.

In the bond market, the yield on the 10-year Treasury note fell below that of the two-year note, a so-called inversion of the yield curve that has preceded previous recessions by a year or so.

"CRAZY INVERTED YIELD CURVE!" Mr. Trump wrote on Twitter. "We should easily be reaping big Rewards & Gains, but the Fed is holding us back."

Analysts have said Mr. Trump's unpredictable trade policy could lead businesses to pull back on investments and hiring, further slowing the economy.

"The global environment is responding to this uncertainty. The trade war is leaving a meaningful signature" on trade and business investment in Germany and China, said Nathan Sheets, chief economist at PGIM Fixed Income and a former senior Fed economist.

While there are signs global growth was slowing last year before an escalation in trade tensions, "the trade war has made all of that worse, " he said.

Mr. Trump tapped Mr. Powell to lead the Fed last year but since then has routinely criticized his monetary-policy decisions. "The head of the Fed -- another beauty I chose," Mr. Trump said Tuesday in Monaca, Pa.

The Fed cut its benchmark rate last month by a quarter percentage point to a range between 2% and 2.25%, the first reduction in more than 10 years, and Mr. Powell signaled an openness to lower the rate again later this year.

But he stopped short of saying the Fed would provide the kind of aggressive stimulus typically reserved for recessions, because officials didn't believe such a forecast was warranted.

Former Fed Chairwoman Janet Yellen said Wednesday she doesn't see a recession as the most likely outcome for the U.S. economy in an interview recorded on the Fox Business Network. "The U.S. economy has enough strength to avoid that, but the odds have clearly risen, and they are higher than I'm frankly comfortable with," she said.

While presidents have at times criticized the Fed for not providing more stimulus, Mr. Trump's upbraiding of the Fed is unusual given the recent strength of the economy. Chicago Fed President Charles Evans last week told reporters the Fed should face scrutiny over its decisions, but he warned of potential costs if political leaders undermine the standing of economic policy makers, including the Fed.

"The economy performs better when everybody has full confidence in all of the authorities as they can," Mr. Evans said. "Calling that into question is difficult for everybody."

--Andrew Restuccia contributed to this article.

Write to Nick Timiraos at nick.timiraos@wsj.com

(END) Dow Jones Newswires

August 14, 2019 17:52 ET (21:52 GMT)