Yellen Issues Debt Limit Warning to Congress
Published On Dec 27, 2024, 5:55 PM
Janet Yellen, the Treasury Secretary, has warned Congress that if the debt limit isn't raised or suspended by January 14, 2025, she will have to begin utilizing extraordinary measures to prevent the U.S. from defaulting on its debt. This warning comes during a politically tense moment, especially as Republicans prepare to take control of Congress. The debt limit was previously suspended in June 2023, but this suspension is set to expire. If Congress fails to act, it could affect government payments, including obligations to investors in government debt.
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If Congress does not act to raise the debt limit, investor confidence may decline, leading to a sell-off in U.S. government bonds and potentially broader market volatility. However, if action is taken to raise the limit, it could stabilize markets, potentially making U.S. Treasury bonds a safer investment in comparison to other assets.
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