Mnuchin, U.S. Treasury Secretary, "No Worries About Spending Due to Low Interest Rates"

Emphasizes Low Burden of $3 Trillion Support Plan
Urges State Governments Not to Rely on Federal Government and to Borrow Funds Themselves

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] Steve Mnuchin, U.S. Treasury Secretary, said that despite spending a massive $3 trillion to overcome the novel coronavirus disease (COVID-19), the government is benefiting from very low interest rates.

In an interview with CNBC on the 11th (local time), Secretary Mnuchin said, "One of the reasons we feel comfortable spending all this money is because interest rates are very low," adding, "We are taking advantage of long-term interest rates."

This means that the federal government is utilizing the effect of the Federal Reserve (Fed) lowering the benchmark interest rate to near zero.

He added, "We are borrowing an enormous amount of money long-term, between 10, 20, and 30 years." However, he drew a line regarding refinancing, which involves repaying existing bond issuances and raising funds again.

On this day, the 10-year Treasury yield was moving around 0.68%, down from 1.87% last December. The 30-year Treasury yield was 1.38%, lower than 4.5% in 2011.

Secretary Mnuchin also expressed a negative stance on additional stimulus measures, saying, "Stimulus funds are just beginning to flow into the U.S. economy."

Regarding states appealing for federal support due to fiscal problems, he emphasized, "We will not bail out states from problems that existed before. The federal government does not need to buy back debt. Since interest rates are very low, most of the necessary funds can be borrowed."

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