Jerome Powell, president of the United States Federal Reserve (FED), stated this March 30, 2026 in a conference at Harvard University that the fiscal problem of the United States does not yet lie in the current size of the debt, but in its trajectory.
“The level of debt is not unsustainable, but the path is,” said when answering a question on the growth of federal debt. And he concluded: “Our federal debt is growing substantially faster than our economy and that ratio is rising; in the long term, that is the definition of unsustainable.”
The following graph shows the United States federal debt, year by year. It is currently at 38.51 trillion dollars, a level that has been reached to finance wars and alleviate various economic crises, among other reasons that result in what is now It could be a structural problem (although Powell downplays it):
On the federal debt, the Congressional Budget Office foresees that between 2026 and 2036, large and growing public deficits will cause an increase in debt: “Federal debt in the hands of the public sector rises from 101% of GDP this year to 120% in 2036, exceeding its previous maximum of 106% of GDP in 1946,” shortly after the end of World War II, says this organization.
The statement was one of the most forceful messages of a talk in which Powell also spoke about inflation, interest rates, the crisis in the Middle East, financial regulation, employment and artificial intelligence.
Regarding the debt, he left a clear warning: «It is important that we return to a primary balance; “It won’t end well if we don’t do something soon.” However, he stressed that this is not a matter for the body he presides to resolve: “This is not the work of the FED, of course, and I limit myself to these high-level points.”
«We will reach inflation of 2%»
In monetary matters, Powell reiterated that the Federal Open Market Committee (FOMC) stay committed with bringing inflation back to 2%. “We will get there,” he assured. “The FOMC is and will remain committed to bringing inflation back to 2% on a sustained basis.”
As he explained, towards the end of 2024 the FED felt that it had “almost” reached that objective, despite the fact that “essentially 100% of economists” had anticipated a recession after the rapid rate hikes of 2022.
“We didn’t have one,” he said. On the contrary, he maintained that 2023 and 2024 were solid years, with an economy growing at 2.5%, inflation at “two and something” and a labor market close to full employment. “I would call that a soft landing; we did it,” he said.
But, the most recent inflation data in the United States places the consumer price index (CPI) with a growth 2.5% year-on-year.
Powell noted that the disinflation process became complicated again. He indicated that the import tariffs established by President Donald Trump are adding pressure on prices (since the tariff cost is transmitted to the final consumer) and that the escalation in the Middle East could impact energy.
“Tariff inflation is visible and we believe it is really just a one-time price increase,” he said. He estimated that this factor “is adding between half and a full percentage point to inflation.” Added to this are now geopolitical events (such as the war in Iran and the consequent rise in the price of oil) which, he said, “will certainly affect gasoline prices.”
Powell also defended internal debate within the FED in times of uncertainty. Although he acknowledged recent disagreements over the direction of interest rates, he said he doesn’t see that complicating his job.
“When you have a really difficult problem it helps to listen to all sides.” For Powell, in a situation in which there is “downside risk for the labor market” and “upside risk for inflation,” demanding unanimity would be “almost misleading.”
The FED: politically independent, but regulatory active
In financial regulation, Powell clearly differentiated the independence of the FED in monetary policy from its more collaborative role in supervision.
“The FED needs to be fully politically independent” when it comes to rates and inflation, he said. But in regulation, he explained, the current legal framework gives a specific role to the vice president of supervision, which makes the president of the central bank “one more voter” in many of these matters.
Faced with the risk of a new financial crisis, he said that The system is more robust today than before 2008, although not free of threats.
“We want a highly resilient financial system and we have it,” he stated. Still, he added that “no one in this business will give you the green light,” because there are always risks to monitor. Regarding private credit — which, as CriptoNoticias has reported, shows signs of being an industry with a crisis in full expansion — Powell commented that the FED follows it “super carefully” and that, for now, “it does not seem to have the elements of a broader systemic event.”
A “textbook” Powell who did not move the market
Like so many other times, Powell avoided going off script. He did not offer risky definitions or sharp judgments on the most sensitive issues, but rather moved within the margins of political correctness, with measured and carefully formulated responses so as not to open new fronts of controversy.
Even though he left strong statements about the trajectory of the US debt, The general tone of his intervention was one of caution: broad diagnosis, long-term warnings and no disruptive signals for the short term.
This moderate profile was also reflected in the market reaction. In a context of high expectations for the possibility that Powell would reveal some clue capable of altering the course of financial assets, that ultimately did not happen.
Bitcoinfor its part, remained relatively stable and above the 66,000 dollars, without registering sudden movements during or after the conference.