(Bloomberg) -- The Trump administration is discussing a series of steps to contain the economic and market fallout from the rapidly spreading coronavirus, including a push for the Federal Reserve to enact an emergency rate cut and a possible tax cut.
The director of the National Economic Council, Larry Kudlow, and Treasury Secretary Steven Mnuchin both favor the Fed cutting interest rates before its next scheduled meeting on March 17 and 18, according to people familiar with the matter. Within the White House, a rate cut is currently the most actively discussed economic measure to combat the virus, the people said.
The Fed is independent, but its chairman, Jerome Powell, has already signaled the central bank is open to a rate cut. In a rare statement on Friday before markets closed, Powell said the coronavirus “poses evolving risks to economic activity” and that the central bank will “use our tools and act as appropriate to support the economy.”
The president made plain his feelings about the independent central bank on Monday, tweeting that Powell has been “slow to act.” He said later during a meeting with pharmaceutical company executives at the White House that “they should have had a meeitng already.
“I don’t know what takes them so long,” he said.
But the criticism is familiar for Trump, who has long griped about the Fed chairman he appointed and publicly called for U.S. interest rates to be set below zero even before the coronavirus outbreak.
Within the White House, there have also been discussions of an economic stimulus package that would likely be heavily weighted toward tax cuts, but it’s not under serious consideration.
“I don’t think the Democrats are going to be approving any tax cuts because they like to raise taxes instead of lowering taxes,” Trump said at a news conference on Saturday. But he again promised he’ll propose a “middle-income” tax cut ahead of the November election.
The people asked not to be identified because the conversations have been private. A Treasury spokeswoman didn’t respond to a request for comment.
The number of U.S. infections grew to 100 on Monday, including six deaths in Washington state, according to data compiled by Johns Hopkins University.
Trump and Vice President Mike Pence discussed the outbreak with pharmaceutical company executives on Monday, and Pence will meet with airline executives on Wednesday, according to people familiar with the matter. Pence is also scheduled to meet with cruise line executives on Saturday in Florida.
Kudlow’s National Economic Council is meanwhile trying to assess whether the spread of coronavirus would cause only a short-term economic slowdown or whether the U.S. could suffer sustained economic damage that would make a quick recovery less likely.
Countries with a larger burden of virus cases than the U.S. have already announced economic stimulus measures.
Over the weekend, Italy promised a $4 billion package including tax credits and liquidity support for businesses, and Chinese regulators announced a waiver for small companies struggling to repay loans. In South Korea, which has reported more than 2,000 virus cases, the central bank chief said last week that targeting support for businesses will be a more effective response than a cut in headline interest rates.
Mnuchin and his Group of Seven counterparts are holding a phone call on Tuesday to discuss coordinating responses to the economic threat of coronavirus, Bloomberg News reported early Monday.
©2020 Bloomberg L.P.
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