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Bullard sees more hikes, Biden considers 14th Amendment: D.C. latest

Yahoo Finance fiscal policy reporter Jennifer Schonberger discusses the latest headlines from D.C., including St. Louis Fed President Jim Bullard seeing two more rate hikes in 2023, President Biden considering using the 14th Amendment to avert a debt default, and the upcoming meeting between President Biden and Speaker McCarthy.

Video Transcript

ROCHELLE AKUFFO: Well, we're hearing from a slew of Fed speakers this morning. First out of the gate was Saint Louis Fed President Jim Bullard. Here's Jennifer Schonberger with those details. Hey, Jennifer.

JENNIFER SCHONBERGER: Hey there, Michelle. That's right. Saint Louis Fed President Jim Bullard says that he thinks the Federal Reserve could raise rates two more times this year, though the timing of that remains uncertain. He would favor sooner rather than later. Speaking in Fort Lauderdale, Florida, Bullard said since growth has surprised to the upside and inflation has been slower to come down than thought, quote, "I think we're going to have to grind higher with the policy rate in order to put enough downward pressure on inflation."

He went on to say, "I'm thinking of two more moves this year. Not exactly sure when those would be this year. But I've often advocated for sooner rather than later." Now Bullard said he's not anticipating any changes to the Fed's quantitative tightening program any time soon. When it comes to the debt ceiling, he says that is quote, "a must pass," saying default or partial default on the US debt would mean you'd have to pay more to borrow in the future because there would be a risk premium than there otherwise should be. Rochelle?

ROCHELLE AKUFFO: And Jennifer, we know of course deliberations over raising the US debt ceiling are escalating. And as we quickly approach that X date deadline of June 1 at least according to Treasury Secretary Janet Yellen, it does seem that President Biden may have a solution to the country's debt crisis.

JENNIFER SCHONBERGER: Yeah, Rochelle. President Biden is saying over the weekend he believes he has the authority to use the 14th Amendment to unilaterally deal with the debt ceiling, though he acknowledged that there are legal implications there and surmounting those do remain in question as to whether that could be a viable solution. The comments come as President Biden and House Speaker Kevin McCarthy still appear far apart.

After a phone call Sunday afternoon, the two leaders expected to meet this afternoon at 5:30 PM at the White House. Negotiations ground to a halt this weekend with both sides blaming each other. Sunday during a press conference in Japan at the G-7, President Biden called the Republican proposal quote, "unacceptable," a departure from his upbeat posture last week. Take a listen.

JOE BIDEN: Now it's time for the other side to move from their extreme positions because much of what they've already proposed is simply quite frankly unacceptable. It's time for Republicans to accept that there is no bipartisan deal to be made solely, solely on their partisan terms. They have to move as well.

ROCHELLE AKUFFO: The President says he's willing to cut spending but Republicans refuse to entertain raising taxes as a way to cut the budget. Biden saying, quote, "revenue is not off the table." And that's what we continue to have a significant disagreement on, the revenue side. Republicans want to cap spending increases for over the next 10 years while the White House is looking at two years. So Rochelle, a very big gap here still remaining. We'll see how things shake out after this evening's meeting between the President and Speaker McCarthy. Back to you.

ROCHELLE AKUFFO: Indeed. A lot of moving pieces here. It seems like we make progress and then sort of get a bit of a pullback here. Jennifer Schonberger, thank you so much.