Trump says Fed's Yellen does White House's bidding

US Republican presidential nominee Donald Trump said Monday that Federal Reserve Chair Janet Yellen was suppressing interest rates to suit the White House's political agenda.

Speaking to CNBC, Trump reiterated a charge he has made before that Yellen was improperly maintaining a low federal funds rate to bolster President Barack Obama's popularity.

"It's staying at zero because she's obviously political and she's doing what Obama wants her to do. I know that's not supposed to be the way it is but that's why it's low," Trump said.

US Republican presidential nominee Donald Trump said that Federal Reserve Chair Janet Yellen was improperly maintaining a low federal funds rate ©Mandel Ngan (AFP/File)

He alleged that the Fed was leaving the painful task of raising rates to the next president.

"The interest rates are kept down by President Obama. I have no doubt that that's the reason that they are being kept down," he said.

Democratic nominee Hillary Clinton rebuked Trump last week after the Republican made similar claims. Trump's remarks unfairly maligned the Fed and risked harming investors and markets, showing that he ws unfit to be president, she said.

By statute, the Fed is an independent body intended to be shielded from political pressure and whose operations are not funded by the US Congress.

Trump also said Monday that low rates were creating a "false market," adding that stock markets were likely to drop sharply once rates eventually do go up. He said the long period of low rates had most hurt retirement investors who had expected to draw on savings interest.

"The new person who becomes president, let him raise interest rates or her raise interest rates and watch what happens to the stock market when that happens," Trump said.

"The people that were hurt the worst are people that saved their money all their lives and thought they were going to live off their interest and those people are getting just absolutely creamed."

Trump's remarks come after US equity markets lost more than two percent on Friday on fears the Fed will raise rates as soon as this month. Monetary policymakers are due to meet next week.

The Fed raised rates for the first time in nearly a decade last December, signalling the end of extraordinary stimulus policies launched in the financial crisis.

Since then, the Fed has refrained from more rate increases amid worries that the US economy remains weak.

Trump also said the rise in US sovereign debt left the country vulnerable, should rates rise.

"We have doubled our debt under Obama," he said. "I would want to have a policy where we can start to at least gently reduce debt.... What happens if interest rates go up fairly substantially?"