Fed chair on fears of US debt default: ‘It just shouldn’t be thing’
FILE - Federal Reserve Chairman Jerome Powell speaks during a news conference at the Federal Reserve Board building in Washington, July 27, 2022. The U.S. Federal Reserve is expected to raise its key short-term rate, Wednesday, Sept. 21. (AP Photo/Manuel Balce Ceneta, File)
Federal Reserve Chairman Jerome Powell on Wednesday addressed fears the country could default on its debt next month, saying the possibility shouldn’t even be considered and warning of the possible damage a default could inflict on the country’s economy and global reputation.
“We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It just — it just shouldn’t be a thing,” Powell told reporters.
“No one should assume that the Fed can do — can really protect the economy and the financial system and our reputation globally from the damage that such an event might inflict,” he added.
Treasury Secretary Janet Yellen has told congressional leaders the U.S. is expected to no longer be able to pay all of its outstanding debt by as soon as the first of next month.
Congress and the White House have been locked in a tense debate over how to go about lifting the debt ceiling. House Republicans have pushed forward a bill that would raise the borrowing limit, but it includes a number of spending cuts — while the administration has stressed a desire for a “clean” debt ceiling increase that is not tied to such cuts.