While a limited development was observed to increase the debt limit in the USA, the head of the Treasury announced that he was hopeful for a solution.
Speaking to Reuters in Japan, US Treasury Secretary Janet Yellen stated that the negotiations on raising the debt limit were more difficult than in the past, but she remained hopeful about the solution of the debt limit impasse, which brought the United States to the brink of its first default.
Yellen stated in the interview that she expects the issue to be resolved in the next few weeks.
In the US, the federal government has reached the $31.4 trillion debt limit that could lead to default.
The debt limit, or debt ceiling, means “the upper limit on the amount of money the U.S. government can borrow to pay off its debts.”
Republicans, who hold a majority in the House of Representatives, are in favor of significant spending cuts in debt-limit negotiations. Democrats insist on increasing the debt limit and reject Republican proposals to cut certain spending.
There are concerns that the debt limit issue, which has become a deadlock between Democrats and Republicans, will shake the markets. As recession expectations rise in the US, the two-party showdown over the debt limit carries more risk than ever before.