Fed’s Rate Hikes Will Add to US Government, Consumer Debt Levels, Experts Warn

Federal Reserve Chair Jerome Powell listens as President Joe Biden nominates him for a second four-year term in the Eisenhower Executive Office Building’s South Court Auditorium at the White House on Nov. 22, 2021. Kevin Lamarque/Reuters

Now that the Federal Reserve is on a path of monetary tightening—a blend of raising interest rates and reducing its $9 trillion balance sheet—the nation’s fiscal situation is coming under a microscope.

The U.S. government’s debt recently topped $30 trillion, increasing the country’s debt-to-GDP (gross domestic product) ratio to nearly 130 percent. U.S. government debt is now about one-third larger than its pre-pandemic level. Projections show that the national debt could exceed $41 trillion by 2030.