US Markets

Treasury Secretary Steve Mnuchin says market plunge on Fed rate hike 'is completely overblown'

Key Points
  • Treasury Secretary Steven Mnuchin says the stock market's plunge after the rate hike announced by Federal Reserve Chairman Jerome Powell was "completely overblown."
  • Mnuchin also says on Fox Business that "U.S. equities are a tremendous value."
Steven Mnuchin, U.S. Treasury secretary, speaks during a Financial Stability Oversight Council (FSOC) meeting at the U.S. Treasury in Washington, D.C.
Al Drago | Bloomberg | Getty Images

Treasury Secretary Steven Mnuchin said Thursday the stock market's plunge after the rate hike announced by Federal Reserve Chairman Jerome Powell was "completely overblown."

The major indexes reached new lows for the year following the Fed's decision, with the Dow falling more than 350 points.

Mnuchin's comments came during an interview on Fox Business. The Dow Jones Industrial Average, which was down before Mnuchin's interview, fell further following his comments, sinking more than 350 points on the day. The Dow has lost more than 1000 points this week.

Mnuchin said it would be inappropriate for him to say whether he believed the Fed made the right decision by raising its benchmark interest rate a quarter point. But he said that the market was "disappointed" in Powell's comments and "overreacted" to the news.

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"The market was clearly expecting them to have a rate hike. That was priced into the bond market and into the Fed funds market," Mnuchin said. "I think that the market was disappointed in the chairman's comments."

But Mnuchin said he was looking beyond the prediction of two more rate hikes, and pointed to the interest rate forecasts outlined by Fed officials in its "dot plot."

"There's clearly people on the committee who think that they don't need to raise rates much here, and I think you've got to put this in perspective. We've had 5 and 6 percent interest rates. The Fed has said they are close to done. [Powell] said they are data dependent," Mnuchin said. "I think the market has overreacted, and U.S. equities are a tremendous value."

Mnuchin said he was "still optimistic" that the U.S. economy would grow at 3 percent in 2019, but he pointed to the Fed's projection on inflation as "really the more important issue" for the stock market.

"The Fed lowered their expectation for inflation, which is a good thing. We've seen inflation come down, we've seen the oil markets come down. So I think you're looking at a very attractive investment market for the next year," he said.