Current US debt level 'very sustainable', says Fed chairman Jerome Powell

WASHINGTON (AFP) – US government borrowing is on an “unsustainable path” but the current debt level is “very sustainable” and the government will have no problem servicing it, Federal Reserve chairman Jerome Powell said on Wednesday (April 14).

Powell acknowledged the debt – currently US$22.96 trillion (S$30 trillion) – “is growing meaningfully faster than the economy and that’s by definition unsustainable over time.”

“The current level of the debt is very sustainable and there’s no question of our ability to service and issue that debt for the foreseeable future,” Powell said in an appearance before the Economic Club of Washington.

With lending rates at zero, the cost to service the debt actually declined US$41 billion in the first six months of the current fiscal year.

Powell downplayed concerns the debt could fuel inflation and indicated there should be no hurry to tackle the problem.

“This is not the time to prioritize that concern, but it is nonetheless an important concern that I believe we will ultimately have to return to again when the economy is strong,” he said.

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