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Other administration officials walked away from their meetings in Washington last week, where concerns grew about a financial crisis erupting in so-called emerging markets such as Africa, Asia and parts of South America, where food and energy prices have soared and where the steady march of the Fed. A rise in interest rates has forced governments to raise their own borrowing costs. Such a crisis can spread around the world and reverberate on rich countries like the United States.
Yet administration officials say the American economy is strong enough to withstand any such shock, still buoyed by rapid job growth and relatively low household debt.
“This is a challenging global economic moment where stability is hard to find,” said Michael Pyle, Mr. Biden’s deputy national security adviser for international economic affairs, “but the U.S. has momentum and resilience behind its economic recovery, and a path that lays out. The US is in a strong position to address global challenges.”
And there is no guarantee that something will blow. A senior Treasury official said this week that financial risks have increased with higher inflation and rising interest rates, but various data tracked by the department continue to show strength among American businesses, households and financial institutions.
At present, markets for short-term borrowing, which are critical to the functioning of overall finance, appear healthy and fairly normal, said Joseph Abbate, managing director of Barclays. And officials are working on safety measures to prevent the consequences if a disaster strikes. The Financial Stability Oversight Council, which Ms Yellen chairs, discussed the issues at its most recent meeting this month, hearing staff presentations on US financial vulnerabilities.
The Treasury Borrowing Advisory Committee, an advisory group of market participants, asked about a potential Treasury program to buy government debt in its latest questionnaire. Some investors have taken that as a sign that they are concerned about a potential problem and want to be able to improve market performance, especially in light of their comments and outreach.
“We are concerned about the loss of adequate liquidity in the market,” Ms. Yellen said in response to questions after a speech in Washington last week.
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