Federal Reserve Chairman Jerome Powell has voiced concerns about the US’s fiscal path, highlighting the need for it to be addressed as a top-level issue. Speaking at the ECB Forum on Central Banking in Sintra, Portugal, Powell acknowledged that the US is currently running a substantial deficit that requires attention sooner rather than later. While he refrained from commenting on specific policies, Powell emphasized the importance of returning to sustainable financial footing. He noted that the US is currently facing a significant deficit despite being at full employment, and although the level of debt is not yet unsustainable, the trajectory is. Powell stressed that this should be a key focus going forward, as running such deficits in favorable economic times is not a sustainable long-term strategy. He urged action sooner rather than later, acknowledging that the US government currently has a deficit of $1.2 trillion and is $34.8 trillion in debt.
