U.S. Treasury Secretary Janet Yellen said the prospect of higher interest rates in the long run makes it harder to control U.S. borrowing needs, highlighting the importance of focusing on increasing fiscal revenue in budget negotiations with Republican lawmakers.
Yellen said: "We have raised our interest rate expectations, and that does have an impact. This makes it more challenging to keep deficits and interest payments under control."
She reiterated, emphasizing the ratio of inflation-adjusted interest payments to GDP. This ratio has risen over the past year, but the White House expects it to stabilize at around 1.3% over the next decade. "I don't have a hard and fast rule, but I don't want to see it above 2%," this is her most explicit comment on this indicator so far. (Gronhui)