White House Economic Adviser Larry Kudlow defended Donald Trump's criticism of the Federal Reserve Thursday, just hours after the President called the central bank "crazy" for signalling faster interest rate hikes in a booming U.S. economy.

The President had sharp words for the Fed Wednesday, telling reporters in Erie, Pennsylvania that he thought it had "gone crazy" and was "too tight" when asked for his opinion on yesterday's 800 point plunge for the Dow, which Trump called "a correction we've been waiting for" after  a weaker-than-expected sale of 10-year Treasury bonds that drew that highest yield since 2011. 

"The President has his own views and he's stated them many times," Kudlow told CNBC Thursday. "The President is not dictating policy to the Fed. The Fed is independent and it's going to do what it's going to do."

U.S. stocks were attempting a recovery in early Thursday trading, with support coming from a softer-than-expected reading for September inflation, which showed consumer prices rising at 2.3% year-on-year clip, a figure that could, alongside the President's Fed comments, trim bets on future central bank rate hike.

The Dow Jones Industrial Average was still 50 points in the red in the opening hour, but pre-market futures had indicated a 350 point slump prior to the CPI reading, which pared U.S. market losses and helped European stocks gain some upward momentum in their late afternoon trading.

Benchmark 10-year Treasury bond yields, which had hit another 2011 high of 3.25% following yesterday's $23 billion auction, were marked at 3.167% by mid-morning, while 30-year paper eased to 3.351% ahead of this afternoon's sale of $15 billion.

The CME Group's FedWatch tool, which assigns future rate hike probabilities, is still pricing in a 78.1% chance of a December move that would take the Fed's base rate to 2.5% to 2.75%, but the March rate hike bets have slipped below 50% -- to 48.5% -- for the first time in two weeks.

"We are the hottest economy in the world. We're crushing it right now," he added. "Stock market corrections come and go, I would just say be calm: we're in a terrific up-cycle and that's not going to change in my opinion."

The Atlanta Fed's GDPNow forecasting tool, in fact, has improved to an estimate of 4.2% from last week's reading of 4.1%, and S&P 500 earnings are expected to grow by 21.5% from last year, according to I/E/B/S data from Refinitiv, a figure that is more than twice the anticipated rate of growth for the Stoxx Europe 600, once the energy sector is stripped away.