US Federal Reserve Chairman Jerome Powell has issued a warning on the potential economic consequences of a US debt default, saying that the situation would be “highly uncertain and adverse”. Powell cautioned that no-one should assume that the Federal Reserve could protect the US economy in the event of a default, adding that such an occurrence could place the country in “uncharted territory”. Powell’s warning follows a rate increase of 25 basis points – the Fed’s tenth hike in 14 months – while the US debt limit has yet to be resolved. Treasury Secretary Janet Yellen has warned that a US debt default “would produce an economic and financial catastrophe”.
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