A top Fed Official cautioned that failing to raise the US debt ceiling would have devastating consequences as Republicans blocked a bill to increase the borrowing limit.
- John Williams, the president of the Federal Reserve Bank of New York on Monday stated that the US central bank would not handle the impact of a potential default on the government’s debt.
- Williams further warned of the risk that investors might become “extremely nervous” and start thinking of getting out of things, a situation that could lead to an “extreme kind of reaction in the markets.”
- His sentiments were collaborated by Treasury secretary Janet Yellen in a prepared testimony to be delivered to the Senate banking committee on Tuesday.
- Secretary Yellen urged the lawmakers to raise the debt limit to avert what she described would be a “catastrophic event for the US economy.”
The Bipartisan Policy Center projected last week that the US government could default its debt obligations as close as mid-October if the lawmakers fail to raise the debt ceiling.
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