Treasury Secretary Steven Mnuchin told CNBC on Friday the stock market plunge this week was a “natural correction.”
Markets tend to go too far in both directions, he said, adding the U.S. economic fundamentals remain strong.
Mnuchin told CNBC’s Geoff Cutmore on “Squawk Box” from Bali, Indonesia, where the International Monetary Fund and the World Bank were holding their annual meetings.
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Global finance leaders are trying to make sense of the U.S. stock market rout that took the Dow Jones Industrial Average down another 545 points on Thursday for a two-day plunge of nearly 1,400 points or more than 5.2 percent.
The S&P 500 and Nasdaq suffered similar percentage declines.
In premarket trading on Friday, Dow futures were indicting gain of more than 300 points at the open. Strong advances were also being seen in S&P and Nasdaq futures.
This week’s decline in stocks, the worst since late March, was fueled by concern the Federal Reserve might raise interest rates more than forecast.
President Donald Trump has repeatedly slammed Fed Chairman Jerome Powell, saying the central bank is increasing rates too quickly and that stronger economic growth won’t lead to problematic inflation.
The Fed increased rates in three 0.25 percentage point moves this year to a range of 2 to 2.25 percent. Another hike is expected in December.
After their September meeting, central bankers were projected on a path to raise rates to 3.4 percent, before pausing.
The current knock on stocks and the spike in bond yields can be traced back to remarks last week from Powell about monetary policy being a “long way” from neutral.
