In an interview with Bloomberg News, U.S. Treasury Secretary Janet Yellen highlighted the importance of revenue-boosting measures, noting that it becomes challenging to contain the country’s borrowing requirements as the long-term outlook for interest rates rises.
Her remarks came months after the Biden administration, in its latest budget proposal, projected 10-year Treasury yields at 3.7% in the early 2030s, compared to 2.8% seen in its proposal three years ago.
“We’ve raised the interest-rate forecast,” Yellen said on Friday while attending a G7 meeting of the finance ministers and central bank governors of the world’s seven most advanced economies in Stresa, Italy.
“That does make a difference. It makes it somewhat more challenging to keep deficits and interest expense under control,” she added.
“We’re going to be opening up a tax negotiation,” Yellen remarked, referring to the negotiations the Biden administration intends to conduct over some of the Trump-era tax cuts scheduled to expire at the end of 2025 without legislative changes.
Yellen sees need for revenue boost amid higher rate outlook
