Mnuchin pledges to use all tools to support financial market functioning
U.S. Treasury Secretary Steven Mnuchin on Friday said the government would use all its tools to support financial market functioning.
“There will be liquidity available. Whatever we need to do, whatever the Fed needs to do, whatever Congress needs to do, we will provide liquidity,” Mnuchin said during an interview on CNBC.
The Treasury Secretary said that a deal was close with House Democrats on a coronavirus relief measure.
Once this legislation was approved, Mnuchin said the White House would press for a “major stimulus package.”
The White House initially proposed a payroll tax cut but this ran into opposition from Republicans and Democrats. Mnuchin suggested the White House was now open to other ideas to deliver money to workers. He said the fiscal package would include assistance for the airline industry.
Mnuchin said he had been in close contact with Fed Chairman Jerome Powell and said that specific programs to aid the financial markets would be rolled out soon.
Mnuchin also encouraged banks to draw funds from the Fed’s discount window
He said the White House would ask Congress to restore the Fed’s crisis-fighting tools that were taken away under Dodd-Frank.
On Thursday, the Fed took a series of steps to smooth disruption in the Treasury market.
Mnuchin said that there would be an economic slowdown as activity slows markedly to prevent the spread of the coronavirus.
But this might only last three months, he said.
“The medical experts can’t give us a definitive period of time, whether this is one month, or two months or three months, but we’re going to get through this. By the end of the year, I think you can expect a big rebound in economic activity,” Mnuchin said.
U.S. equity benchmarks rose sharply at the open on Friday after a steep declines in the prior day’s trading.
The Dow Jones Industrial Average
opened up 1,200 points.