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| Fed Chairman says US public debt is unsustainable. (Source: Getty Images) |
According to the US Treasury Department , the country's public debt is currently over 34,000 billion USD.
Mr. Powell argued that, in the long run, the government would be on a fiscally unsustainable path, meaning debt would grow faster than the economy.
"Now is the time to prioritize financial sustainability and to do so as soon as possible," the Fed chairman stressed.
Last week, the Fed kept interest rates unchanged for the fourth consecutive meeting. While saying that risks to its employment and inflation goals were more balanced, the Fed said it would not cut rates anytime soon.
Mr. Powell reiterated that view and said that it is unlikely to lower interest rates at the upcoming meeting in March 2024.
As for the conditions for cutting interest rates, he said, the most important thing is to weigh the risks between acting too soon and acting too late.
The Fed currently has a 23-year high interest rate of 5.25-5.5%.
A poll of economists conducted by the National Association for Business Economics (NABE) shows that the US economy will avoid a recession next year.
About 91% of respondents to the latest NABE survey said the probability of the US entering a recession in the next 12 months is 50% or less.
The figures are a far cry from the view a year ago when most economists predicted a recession as the Fed raised interest rates to combat high inflation.
The optimism expressed by economists in the survey coincides with recent economic data, including a gauge of consumer confidence that rose to its highest level in two and a half years. In addition, inflation has fallen faster than expected and the labor market is cooling, but not too quickly.
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