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US debt on an unsustainable path, needs to be addressed, Fed's Powell says

BY Reuters | ECONOMIC | 01/28/26 03:11 PM EST

WASHINGTON, Jan 28 (Reuters) - Federal Reserve Chair Jerome Powell said on Wednesday that the ?growth of U.S. federal debt ?was on an unsustainable ?path and needed ?to ?be addressed, but that he had ?no expectations ?that it would a cause near-term negative ?market event.

Powell ?told ?a news conference that the level of ?debt was sustainable at the moment, "but the path is unsustainable and the sooner we work ?on ?it, the better."

"But you know, right ?now we're running a very large deficit at essentially full employment and so the fiscal picture ?needs to be addressed, and it's not really being addressed," ?Powell said. (Reporting by David Lawder)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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