Federal Reserve Chair Jerome Powell avoided discussing debt-limit negotiations Tuesday during a closed-door meeting with a group of House Democrats as a standoff over raising the federal borrowing limit continued in Washington.
(Bloomberg) — Federal Reserve Chair Jerome Powell avoided discussing debt-limit negotiations Tuesday during a closed-door meeting with a group of House Democrats as a standoff over raising the federal borrowing limit continued in Washington.
“The conversation we were having was the economy generally,” US Representative Ann Kuster, the lawmaker from New Hampshire who leads the moderate New Democrat Coalition that met with Powell, said after the meeting.
Powell “gave us the impression that things are starting to get better, but inflation was still in that 4-5% range,” so “he still has concerns,” Kuster said.
Tuesday’s gathering, which began at 12:30 p.m. in Washington and lasted about an hour, had long been planned and was not in response to the impending debt-limit deadline, according to NDC spokeswoman Emma Weir. Powell did not respond to questions from reporters on his way into and out of the meeting.
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Another attendee, US Representative Gregory Meeks of New York, said Powell did not discuss what the central bank might do at its upcoming June 13-14 monetary policy meeting.
The Fed chair has been warning for months of the consequences of a failure to raise the debt limit for the US economy and financial system. Treasury Secretary Janet Yellen reiterated Monday that her department will run out of sufficient cash as soon as June 1, raising the risk of default if President Joe Biden and House Speaker Kevin McCarthy are unable to strike a budget deal soon.
Powell told the coalition Tuesday that the Fed does not have the tools to mitigate the fallout from a default on US government debt — echoing what he has said publicly — but otherwise avoided the topic at the meeting, according to someone who was present and asked not to be identified.
–With assistance from Steven T. Dennis and Gregory Korte.
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