Administration looking for ways to take advantage of low rates to reduce debt-servicing costs
U.S. Treasury Secretary Steven Mnuchin said ‘we think there is some demand’ for a 50-year U.S. bond.
The Treasury Department is “very seriously considering” issuing a 50-year Treasury bond next year, Treasury Secretary Steven Mnuchin said Thursday, as the Trump administration looks to take greater advantage of low interest rates to slow soaring borrowing costs.
The Treasury said last month it was once again exploring the possibility of issuing debt with maturities beyond 30 years, after considering and then dropping the idea in 2017.
“We think there is some demand for it,” Mr. Mnuchin said in an interview on CNBC. “There’s some technology issues we need to make sure we have in place, there’s market issues. But we would do this in a way that if there is demand, it’s something that we would meet.”
Debt-servicing costs are one of the fastest-growing drivers of federal spending, amid large annual federal budget deficits. Interest payments have increased nearly 10% so far this fiscal year, totaling $497.2 billion over the 10-month period through July, roughly $1.6 billion a day, according to the Treasury Department.
President Trump, as part of his pressure campaign on Federal Reserve policy makers, argued on Wednesday that further short-term rate cuts would help lower government borrowing costs.
Reacting on Twitter to a rate cut by the European Central Bank on Thursday morning, Mr. Trump said of European governments: “They get paid to borrow money, while we are paying interest!”
In Thursday’s move, the ECB cut its key interest rate by 0.1 percentage point, to minus 0.5%.
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