Debt ceiling debate approaches 11th hour. Economists at ANZ Bank discuss the possible deal.

Financial market volatility and disrupting growth

“We anticipate that a deal will be reached to suspend the debt limit for a few months to provide more time to negotiate a mutually satisfactory outcome. Negotiations over that period are likely to be fractious, causing financial market volatility and disrupting growth.” 

“The Democrats and Biden will most likely need to reach a compromise agreement with the Republicans that incorporates long-term budget savings in return for a reasonable increase in the debt limit or a lengthier suspension period.