The Federal Reserve Governor warns the markets to request higher rates on the debts of the US Treasury

Ruler of the Federal Reserve Christopher Wal He said on Thursday that the financial markets responded to the expected deficit in light of the package of reducing Republican taxes in Congress by demanding the high interest rates of US debt issued in the treasury market.

Speak exclusively with Edward Lawrence “Fox Business” on “Morning with MariaHe said that the market believes that the bill will do more in terms of strengthening spending on reducing the constant budget deficit, but with the expectation that the deficit will expand if the bill becomes a law, the markets have responded with higher returns on US Treasury bonds.

“Every person I spoke to in the financial markets, they are staring at the draft law and believe that it will be much more in terms of financial restraint, and they do not necessarily see this. Therefore, there will be a lot of issuance of the treasury.

Lawrence Walir asked if it is likely that there was a weaker request on American assets to move forward, and the Federal Reserve Governor responded, “There seems to be risks to American assets in all fields, not just government debts, but everything. And whether that is continuing in the future or not, I do not know.”

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“I think that as long as this type of economy is due to a good path, the economy begins to grow, and inflation remains, you may see an appearance in demand for American assets,” he added.

The Treasury held the sale of 16 billion dollars from Treasury bonds for 20 years On Wednesday, this witnessed weak demand and the effects of a sale in the stock and dollar market. Waller pointed out that the federal reserve is prohibited by Congress from interfering to buy bonds during an initial auction.

Wald said: “The markets are watching fiscal policy with the draft law that is placed in the House of Representatives and the Senate, and they have some concerns about whether it will reduce the deficit.” “We ran 2 trillion dollars deficit In the past few years, this is not sustainable, so the markets are looking for a little more financial specialization, they are worried, and we hope that the bill will continue to continue. But then you will demand the markets not, in addition to this. “

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Walir was also asked about the potential influence of the president Donald Trump Customs tariffs on inflation and consumer prices amid the continuous Federal Reserve focus on re -inflation to the target rate of 2 %. Customs duties are taxes on imports, and companies usually transfer some high costs to consumers through high prices, which in turn can pay inflation data to the top.

“All the CEO I spoke to said that they can deal with a 10 % tariffWaller said: “They cannot deal with 25 % extremely easily without passing through or stopping other things,” Waller said.

He added: “The Playbook Central Bank is that you are looking through this. You do not exaggerate his reaction because you will raise prices after that, and hurt the economy for something that was just one time effect.”

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Trump temporarily reduced customs tariffs on imports from many countries while his administration is negotiating trade agreements, although officials indicated that the main tariff by 10 % may remain in effect.

Waller said that a 10 % tariff will be transferred to consumers somewhat, although he believes he will not only do so Pay inflation for a short time to top Before the decline begins again.

Waller said: “There will be some corridors,” Waller said.

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He added: “If a 10 % tariff, imports are 10 % of the price index, so 10 % over 10 % is a 1 % increase in the price level.” “This means only that a third of it will be approved, so instead of 2.5 %, you may see 2.8 %, but that’s all and then the inflation should start returning to the bottom.”