WASHINGTON — Treasury Secretary Steven Mnuchin told lawmakers Tuesday that he supported the Federal Reserve's decision to cut rates in a bid to support the economy amid the coronavirus outbreak.
Mnuchin also said he saw the disease's spread as having "short term" impact on the economy.
"I very much support the Fed's decision ... I think they did the right thing getting ahead of this," Mnuchin told the House of Representatives' Ways and Means Committee during his testimony on the Trump administration's proposed 2021 budget.
The Fed cut interest rates by half a percentage point in response to the novel coronavirus during the scheduled committee meeting. Fed Chair Jerome Powell said in a press conference later that the committee saw "a risk to the economy and chose to act."
But it wasn't enough for President Donald Trump. On Tuesday, after the Fed announced its decision, Trump demanded that the central bank keep cutting rates. The Fed "must further ease and, most importantly, come into line with other countries/competitors," Trump tweeted.
"We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!" he added.
The Fed decision didn't mollify markets, either. The Dow Jones industrial average fell more than 800 points in late afternoon trading.
Mnuchin's statement was in direct response to Rep. Brendan Boyle, D-Penn., who brought up the Fed's decision in his allotted time.
"Anyone as an investor will look at it as welcome news," Boyle said. "While that might be the reaction at first blush, I have to say I find it concerning because this does have echoes of the 2008 Fed recession."
Mnuchin, in turn, sought to calm lawmakers' concerns.
"I would say this is no different than any other severe situation," Mnuchin said. "This is going to have an impact on the short term of the economy."
He added, referring to the outbreak: "It's very different than the financial crisis because the good news here is that there will be an end in sight."
The flu-like virus — which has already killed at least 3,110 people and infected roughly 91,300 people around the world — has spooked global markets as investors fear the virus could trigger an economic slowdown.
Following the hearing, Mnuchin told reporters on the Hill that Treasury is currently exploring other tools for tackling coronavirus at their disposal and that he is highly confident their actions will have bipartisan support.
Earlier in the day, Mnuchin and Powell led a conference call with G-7 finance ministers and central bank leaders on the potential economic impacts of coronavirus.
"Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks," the G-7 statement said, without providing specific actions or guidance.