At present, the US government is not concerned about the issue of the rising national debt-to-GDP ratio, Federal Reserve Chairman Jerome Powell said during a speech at the New York Economic Club on the 10th. February.
According to Powell, it is too early to start worrying about the government’s “ability to finance itself” and stressed that the Fed will maintain its monetary stance on interest rates for “maximum employment and price stability” .
“Federal budgetary matters play no role in our deliberations […] In my opinion, the tax authorities will have to revisit this issue and now is not the time to do so – when the economy is weak we have 10 million unemployed. That’s when the economy is strong, unemployment is low, taxes are rolling, ”Powell said.
The Fed chief separately admitted that the US federal budget “is not on a financially sustainable path” and added that it had been for years, even before the start of the pandemic. At the same time, he stressed that this does not necessarily mean that the federal debt itself is not sustainable, noting that low interest rates in the country are playing into the hands of the US government.
Powell’s statements come as the U.S. federal budget comes under simultaneous pressure from increased government spending on coronavirus relief efforts, with President Joe Biden pushing for another round of citizen payments and lower costs. taxes caused by a major downturn in the US economy due to the pandemic.
According to the US Department of Commerce, the country’s GDP contracted 3.5% in 2020, posting its worst performance since World War II. The previous year was also one of the worst in terms of unemployment, as many companies had to close or cut jobs due to limitations and lockdowns brought on by the coronaviruses, the hospitality sectors, the hospitality industry. aviation and transport being the most affected.
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