The Fed’s Powell says the US is on an ‘unsustainable fiscal path’ as its debt burden grows.
Federal Reserve Chairman Jerome Powell is warning that the United States is on an “unsustainable fiscal path” as debt currently outpaces growth in the broader economy.
In an interview with 60 Minutes on January 4th, Powell said that it is “past time” for elected US officials to start a “grown-up conversation” about reducing the level of debt in the economy.
“In the long term, the US is on an unsustainable fiscal path. The US federal government is on an unsustainable fiscal path, and that means the debt is growing faster than the economy,” Powell said.
Bitcoin (BTC) prices stumbled late last week as the Fed left interest rates at 5.25%–5.50%, and the central bank ended any hope of a rate cut, saying it needed “more confidence” as it did in March inflation. It has been seen before doing this.
Powell reiterated this during the interview, that the Fed is still waiting for good evidence before considering a rate cut.
“This committee will not reach that level of confidence in time for the March meeting in seven weeks,” Powell said, adding that “almost all” members of the Federal Reserve Board believe it will be cut at some point this year. .
“We need a little more confidence before we take that very important step to lower interest rates.”
Declines in prices of cryptocurrencies and growth-oriented tech companies like Apple, Nvidia and other big tech stocks are considered big money.
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When the Federal Reserve lowers rates, borrowing capital is cheaper, which generally increases aggregate spending activity and threatens appetite in the broader economy.
Powell believes that inflation will continue to decline in the first half of this year and that the central bank will review its strategy at the next meeting of the Federal Open Market Committee in March.
“The things that would make us want to move sooner are if we see weakness in the labor market or if we see inflation come down really convincingly,” he said.
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