Fed Chair Warns of ‘Uncertain and Adverse’ Consequences of US Debt Default — ‘We’d Be in Uncharted Territory’

Federal Reserve Chairman Jerome Powell has warned of “highly uncertain and adverse” economical consequences if the U.S. defaults connected its indebtedness obligations. “No 1 should presume that the Fed tin support the system from the imaginable abbreviated and semipermanent effects of a nonaccomplishment to wage our bills connected time,” helium further cautioned.

Fed Chair Jerome Powell’s Debt Default Warning

Federal Reserve Chair Jerome Powell has warned of the imaginable consequences of a U.S. indebtedness default. “We’d beryllium successful uncharted territory and the consequences connected the U.S. system could beryllium highly uncertain and adverse,” helium said this week, adding:

No 1 should presume that the Fed tin support the system from the imaginable abbreviated and semipermanent effects of a nonaccomplishment to wage our bills connected time.

Powell’s informing came aft the Federal Reserve increased its cardinal involvement rates by 25 ground points this week — its 10th hike successful 14 months. The summation takes the Fed Funds Rate to a people scope of 5%-5.25%, the highest since August 2007.

The Federal Reserve president noted that Fed officials discussed the imaginable hazard of the U.S. indebtedness bounds during their latest Federal Open Market Committee (FOMC) meeting, but the taxable did not person an interaction connected their complaint hike decision.

Many radical person warned of the dire consequences of a U.S. indebtedness default. Treasury Secretary Janet Yellen, for example, cautioned that it “would nutrient an economic and fiscal catastrophe.” The president of the European Central Bank (ECB), Christine Lagarde, said it would beryllium a “major disaster” if the U.S. were to default connected its indebtedness obligations.

As Democrats and Republicans stay deadlocked implicit raising the indebtedness ceiling, Yellen revealed this week that the Treasury Department volition not beryllium capable to wage each of the government’s indebtedness obligations “as aboriginal arsenic June 1, if Congress does not rise oregon suspend the indebtedness bounds earlier that time.”

Powell stressed that the Federal Reserve does not get progressive successful negotiations connected this topic, stating:

We don’t springiness proposal to either speech … We conscionable would conscionable constituent retired that it’s precise important that this beryllium done.

What bash you deliberation of Fed Chair Jerome Powell’s informing astir the U.S. defaulting connected its indebtedness obligations? Let america cognize successful the comments conception below.

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