News ID: 237189
Published: 0158 GMT January 11, 2019

Fed chair says worried about rising US debt

Fed chair says worried about rising US debt
Federal Reserve Board Chair Jerome Powell talks with Carlyle Group co-CEO David Rubenstein during the Economic Club of Washington D.C. luncheon in Washington, on Jan. 10, 2019.

US Federal Reserve Chairman Jerome Powell is concerned about rising US debt. The annual debt in 2018 topped $1 trillion, while the overall deficit was $21.9 trillion as of January 8, according to the US Treasury, $16 trillion of which is owed by the public.

"I'm very worried about it," Powell told those at The Economic Club of Washington D.C., on Thursday. "From the Fed's standpoint, we're really looking at a business cycle length: that's our frame of reference."

"The long-run fiscal, nonsustainability of the US federal government isn't really something that plays into the medium term that is relevant for our policy decisions," Powell continued, reported.

"It's a long-run issue that we definitely need to face, and ultimately, will have no choice but to face."

While the US has sustained annual debts higher than 2018's, the debts were high in 2009 and 2010 when the economy was recovering from the Great Recession. Currently, even though the economy is strong, the annual national debt is growing.

The Fed raised its benchmark overnight lending rate four times in 2018 as a part of its goals of maximizing employment and keeping prices in check. Powell and his colleagues have cited months of strong labor statistics and healthy GDP numbers while hiking rates, reported.

However, tepid inflation and concerns surrounding the longevity of the current economic expansion have prompted backlash from some market participants. Fears that policymakers may be elevating borrowing costs at too quick a pace contributed to a broad stock sell-off in the fourth quarter of 2018, with both the Dow Jones Industrial Average and the S&P 500 posting their worst Decembers since the Great Depression.

Another worry is that strong economies don't always remain strong, there's concern about what would happen if the US hit another recession, CNBC reported.


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