Powell Says a Long Way From Fiscal Dominance

Q: (last question): At what point is the deficit/debt too big, and when will we get there?

• A: Elected officials make those difficult decisions, not us. As a general rule, important to be on a sustainable fiscal path, and the time to focus on that is when the economy is strong, unemp low, tax money coming in etc.
• The fact that Congress is debating a fairly large bill suggests something substantial will get done. Debt-to-GDP is high but by other measures not that high (eg real interest rate payments). In the near term, the case for fiscal is strong, and would be very good for the economy if we got something soon.

Q: Worried about political pressure to keep rates low because the country can't afford a high interest bill?

• A: That's what people call fiscal dominance. We're a very long way away from that. If we do our jobs well and support the economy etc, I don't think that's something to worry about in the near term.