Summary
Former Federal Reserve Chair Janet Yellen warned that the increasing national debt of the United States might hinder policymakers' ability to address other financial challenges. She highlighted a risk called "fiscal dominance," where the central bank might be pressured to keep interest rates low to help manage the country's debt. This situation could interfere with the Federal Reserve's duties to control inflation and support employment.
Key Facts
- Janet Yellen spoke about the risks of rising national debt at a panel discussion on the "Future of the Fed."
- The U.S. national debt surpassed $38 trillion in late 2025.
- The Congressional Budget Office projects the debt could reach $50 trillion within a decade.
- High national debt could lead to "fiscal dominance," pressuring the Fed to keep interest rates low.
- Keeping rates low might limit the Fed's ability to manage inflation and employment effectively.
- There have been tensions between President Trump and the Federal Reserve over interest rates.
- The U.S. had its credit rating downgraded by Moody’s due to large fiscal deficits and rising interest costs.
