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Powell Says Fed Can’t Shield Economy From a Debt Default

  • Fed chief said central bank will monitor money markets closely
  • Chair expects Congress to reach a deal to raise debt limit
Bloomberg business news
WATCH: Federal Reserve Chair Jerome Powell says more rate hikes may be necessary during a news conference in Washington.Source: Bloomberg

Federal Reserve Chair Jerome Powell warned against any assumption that the central bank can rescue the economy if Congress fails to raise the federal debt ceiling — a move that could force the Treasury into a payments default.

“No one should assume that the Fed can protect the economy from the consequences of failing to act in a timely manner,” Powell said at a press conference in Washington Wednesday after the Fed’s latest policy meeting. “There’s only one way forward here, and that is for Congress to raise the debt ceiling so that the United States government can pay all of its obligations when due.”