WASHINGTON — Treasury Secretary Janet Yellen said Friday that the United States is likely to have enough reserves to push back a possible default until June 5.
“We now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt ceiling by June 5,” Yellen wrote. in a letter to the Speaker of the House, Kevin McCarthy.
Friday’s new date provided some much-needed breathing room to negotiations between the White House and congressional Republicans who appeared to be closing in on a compromise deal on Friday to increase the debt ceiling during two years.
The last time the so-called “X date” was updated was May 1, when Yellen told Congress that the United States had enough cash to meet its obligations through “the beginning of June, and potentially as early as June 1st.
Markets closed higher on Friday, buoyed in part by optimism that there would be a deal passed by the House and Senate and signed by the president by June 1.
The new date came amid growing concerns around the world over the United States’ credit rating.
On Wednesday, the rating agency Fitch announced that it had placed the United States’ triple A status on “negative rating watch.”
On Friday, in a preliminary report from the International Monetary Fund annual evaluation of the United States, the officials wrote that “tension on the federal debt ceiling could create additional, entirely avoidable, systemic risk for both the United States and the global economy.”
If the United States technically defaults, even for a few days, it could drive up interest rates and undermine confidence in the U.S. dollar. Economists note that America’s adversaries, and especially Russia and China, are watching the current impasse over the debt ceiling with pleasure, convinced that an erosion of confidence in the US dollar would be to their advantage. .
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