WASHINGTON — U.S. Treasury Secretary Steven Mnuchin and House Republicans tried to brush off declines in the stock market Tuesday morning, after global markets continued their selloff.
“We are very focused on the long-term economic growth, and we believe that the policies we’ve enacted including tax reform are very positive for long-term economic growth,” Mnuchin said at a hearing on financial stability convened by the House financial services committee.
The Treasury chief said the stock market is still up “over 30 percent” since President Donald Trump was elected, but said the administration is monitoring the situation.
“We’re monitoring the stock markets,” he said. “They’re functioning very well, and we continue to believe in the long-term impact of the stock market.”
Monday marked the biggest single-day point drop for the Dow Jones Industrial Average, a decrease of 1,175 points, or 4.6 percent. Mnuchin’s testimony came after the Dow had already fallen another additional 500 points, before recovering some ground.
The multiday decrease follows markets’ rapid and seemingly unstoppable rise in the last year, which had fed off the Fed’s easy-money policies. Markets began to dip on Friday following strong wage growth numbers, which sparked fears of faster-than-expected inflation, presumably the impetus for the Federal Reserve to move faster to hike interest rates.
The Treasury chief has echoed Trump’s boasts that the stock market is a reflection of the positive effect of his policies, and Mnuchin remarked on multiple occasions before the tax bill’s passage that if the stock market were to drop, it would be Congress’ fault if it failed to approve the legislation.
House financial services Chairman Jeb Hensarling (R-Texas) at the hearing blamed the Fed for juicing markets, saying it was “ironic but totally predictable that equity markets would now swoon over the prospects of higher interest rates and possible inflation associated with a breakout of economic growth.”
“Artificially low interest rates may have benefited some on Wall Street but they haven’t been particularly helpful to Main Street,” Hensarling said.