Stock markets in the United States were headed for their worst December decline since the 1930s after President Donald Trump claimed the country’s central bank was the “only problem” the economy had, reported The New York Times. In saying so, Trump undid his staff’s efforts to calm markets after reports that he wanted to fire the Federal Reserve chief.

Bloomberg had reported on Friday that Trump had discussed with officials the idea of firing Federal Reserve Chairman Jerome Powell. The next day, Treasury Secretary Steven Mnuchin claimed that Trump had denied the report to him, while Mick Mulvaney, Trump’s chief of staff, told ABC that the president had realised he lacked the authority to fire Powell.

The S&P 500 index declined 2.7% on Christmas Eve to come close to a “bear market” situation, which happens when they fall 20% since a recent peak. The index is now down 19.8% since its closing high on September 20. Stocks have been falling sharply this month on concerns of weaker economic growth, reported Reuters.

Trump has reportedly been upset with the Federal Reserve for recent interest rate increases. Under Powell, who was appointed by Trump in February, the central bank has kept gradually raising interest rates as the economy picked up in its recovery since the 2008 crisis. Several countries had brought interest rates down to near or even below zero after the crisis to aid faster recovery.

Government shutdown likely to continue

Concerns over the partial government shutdown also continued to keep investors tense after Mick Mulvaney told Fox News that the impasse could continue till January 3. The new Congress that was elected in November convenes on that day, with the Democratic Party taking over the House of Representatives.

The federal government had shut down early on Saturday after Congress and the White House failed to agree on a spending bill that included Trump’s demands for $5.7 billion for a wall along the Mexico border. This is the first time in 40 years that the US government has closed three times in a year.

‘Respect the Fed’s independence’

Meanwhile, Republican Senator Jeff Flake on Monday tweeted a photograph of a banknote worth 5 billion Zimbabwean dollars, and said: “I’ve lived in countries where the Head of State has used the central bank for political purposes. Please respect the Fed’s independence, Mr. President.”

Flake was referring to the use of banknotes with values in trillions of local dollars after hyperinflation in Zimbabwe since 2009 reached alarming levels and crippled the economy.