US Government to Feel Higher Cost of Borrowing after Fed Hike

Uncle Sam is about to get hit with higher interest payments.

Much higher.

And those higher costs will force the government to raise taxes, cut spending or borrow more to make up the shortfall.

That warning comes from a new report by the Committee for a Responsible Budget, following last week’s move by the Federal Reserve to begin raising interest rates, a major turning point that signals a historical reversal of a long-term decline in the cost of borrowing.

Rising interest rates help savers and hurt borrowers. As the biggest borrower on the planet, the U.S. government will soon begin paying more to investors holding roughly $14 trillion in Treasury debt. Over the next 10 years, those interest payments are projected to become one of the biggest line items in the federal budget.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza