Federal Reserve Chair Jerome Powell has raised concerns about the United States' fiscal situation, describing it as an "unsustainable fiscal path." Powell emphasized the need for an "adult discussion" among elected officials to address the growing level of debt in the economy.
He pointed out that the U.S. federal government's debt is increasing faster than the overall economy is growing, signaling long-term fiscal challenges. This assessment comes amid debates about economic policies and interest rate decisions by the Federal Reserve.
Powell stated that the central bank is waiting for clear evidence of economic strength before considering any rate cuts, expressing doubt that such confidence would be reached in time for the March meeting. He mentioned that most Federal Reserve board members anticipate rate cuts later in the year but emphasized the importance of gaining more confidence before taking such a step.
Rate cuts, when implemented, can have a bullish impact on risk assets like cryptocurrencies and growth-oriented tech companies, as they reduce borrowing costs, typically boosting spending and risk appetite in the broader economy.
Powell expects inflation to decrease in the first half of the year and indicated that the central bank would reassess its strategy in the upcoming Federal Open Market Committee meeting in March.