MNI BRIEF: CBO's Swagel - Fiscal Situation Long-term Challenge
MNI (WASHINGTON) - Congressional Budget Office Director Phillip Swagel told an MNI Livestreamed Connect event Monday the economy continues to grow, the labor market remains in pretty good shape, and inflation is still above target, which is likely to delay further interest rate easing from the Federal Reserve, adding additional near-term pressure on the fiscal deficit.
"The fiscal situation is a challenge, but it's not an imminent challenge, and policymakers have time, whether to address it or to take other actions that they might see as necessary in the meantime," Swagel said, noting research showed a 50-basis point increase in Treasury yields across the curve would raise interest costs by USD2 trillion over 10 years. Prior forecasts showing Fed interest rate cuts this spring are "not off the table" but are likely now to be later.
Swagel said it remains to be seen how the White House's Department of Government Efficiency, or DOGE, will impact the trajectory of federal government spending. "We just don't know yet," he said. (See MNI INTERVIEW: Fed To Stay Careful Amid Policy Turmoil - Johnson)