WASHINGTON: US Treasury Secretary Steven Mnuchin said on Monday he sees no need for the country to buy back debt and that he plans to borrow money long-term to lock in low interest rates, as the coronavirus pandemic rocks the economy.
“One of the reasons I do feel comfortable with us spending all this money is because interest rates are very low. And we’re taking advantage of long-term rates,” Mnuchin said in a CNBC interview, adding that the United States plans to refinance all its debt to lock in low rates.
“Because of the amount of debt we have in short-term that does roll off and the amount of debt we’re using for these deficits, I think we have tremendous opportunities without needing to buy back debt,” Mnuchin said.
The Treasury last week announced a record-busting plan to borrow US$3 trillion during the April-June quarter to fund coronavirus economic rescue programmes and cover a massive drop in revenues. It launched a new 20-year bond to extend maturities.
Mnuchin told CNBC the Treasury had looked at longer maturities but found that demand for the 20-year bond was stronger.
The Treasury chief said it was unclear whether May unemployment numbers could be worse than the 14.7% recorded in April, but struck an optimistic tone about businesses reopening over the summer.
Predictions based on normal economic models are difficult because the jobs data is a function of a “closing of the economy and an opening of the economy,” Mnuchin said.
“We’re very sympathetic to all the workers who this is impacting, if the numbers are worse next month, you know, we understand that,” Mnuchin said. “But I think the numbers are going to be getting better as we go into the summer and we reopen the economy.”