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Fed's Powell: don't assume Fed can shield U.S. economy from debt limit default

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The Federal Reserve is unlikely to be able to shield the US economy from the fallout of a failure to raise the federal debt ceiling, and the government should never be in a position where it is unable to pay all of its bills, Fed Chair Jerome Powell said

that resolving the debt ceiling standoff between Republicans and Democrats was a matter for Congress and the Biden administration.

A U.S. default would be unprecedented and have "highly uncertain" and "quite diverse" consequences for the U.S. economy, Powell said, but he declined to enumerate them. "No one should assume that the Fed can really protect the economy and the financial system and our reputation globally from the damage that such an event might inflict," he added.

 

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