According to Federal Reserve Chairman Jerome Powell, the United States’ national debt is “unsustainable” and needs to be addressed. He made this claim in an interview that aired on February 4, 2024.
The US Treasury estimated that the world’s largest economy’s outstanding debt was currently over USD 34 trillion.
“Over time, the US’s fiscal trajectory is unsustainable. The US federal government’s budgetary trajectory is unsustainable. And that just means that the debt is growing faster than the economy,” Jerome Powell said during CBS’s “60 Minutes” news programme.
“It’s probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path,” the Fed boss stated further.
“I believe that the general consensus is that we need to return to prioritising economic sustainability. Additionally, it’s preferable to act sooner rather than later,” Jerome Powell noted.
Although the Federal Reserve stated at the time that “risks to achieving its employment and inflation goals were moving into better balance,” it also made hints that rate cuts were not likely.
In January 2024, the Fed opted to keep interest rates unchanged for the fourth consecutive meeting.
Jerome Powell restated that position in the CBS interview, speculating that a rate cut was unlikely to occur at the Federal Open Market Committee’s (FOMC) March 2024 meeting.
“I think it’s not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks,” Jerome Powell stated.
He said, “It doesn’t need to be better than what we’ve seen, or even as good,” in response to a question concerning the prerequisites that would need to be met for a final cut. It only has to be excellent.”
“We can only assess the risk of moving too soon against the risk of moving too late and make that decision in real-time,” he continued, while adding, “Based on our expectations, I would think that time is approaching.”
At its 23-year high, the Fed’s benchmark interest rate is currently stable at 5.25-5.50%.
Jerome Powell stated that the Fed would review its interest rate goal in March 2024 and that he thought inflation would continue to fall off in the first half of 2024.
“Nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts,” he concluded.