Borrowing costs

Past Fed rate hikes won’t add to projected low borrowing costs – White House

The Federal Reserve Building on Constitution Avenue is pictured in Washington, U.S., March 27, 2019. REUTERS/Brendan McDermid

Join now for FREE unlimited access to Reuters.com

Register

WASHINGTON, June 16 (Reuters) – The White House said on Wednesday it did not expect the Federal Reserve’s projections for post-pandemic interest rate hikes to significantly alter its own forecasts for longer-term rates and the cost of borrowing to finance planned investments. .

A White House official hailed the Fed’s forecast for 7% growth in the US economy given improving health conditions, saying it showed President Joe Biden’s efforts to ramp up vaccinations and getting people back to work were paying off.

On Wednesday, Fed officials set an accelerated schedule for interest rate hikes, starting in 2023 instead of 2024, and said the 15-month health emergency was no longer a major impediment to U.S. trade. . Read more

Join now for FREE unlimited access to Reuters.com

Register

The White House official said the Biden administration would update its own economic forecasts in the coming months to reflect an improving economy, but still believed that actual debt service rates on U.S. debt would remain negative to marginally positive over the next decade.

That was still well below historic norms and meant Biden’s budget plans remained fiscally prudent, the official said.

Biden sent Congress a $6 trillion budget plan last month that would increase spending on infrastructure, education and climate change, arguing it was smart to invest now, when the cost borrowing was cheap. Read more

While US Treasury yields have risen from record highs seen at the height of the pandemic last year, government borrowing costs are expected to remain “well below” historic levels in the next decade, Treasury Secretary Janet Yellen said Wednesday during a Senate Finance Committee hearing. .

The White House official also praised Fed Chairman Jerome Powell’s forecast for a ‘very strong labor market’ and his observation that economists had consistently underestimated the amount of capacity during the latest expansion. to be taken.

Getting people back to work quickly was the guiding principle of the president’s economic strategy to “get punches in the arms and checks in the pockets,” the official said, adding that these short-term measures would be bolstered by planned longer-term investments in child care. and paid holidays.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Andrea Shalal; edited by Diane Craft

Our standards: The Thomson Reuters Trust Principles.