Fed officials split on policy, united on default danger
ST LOUIS/ BOISE, Idaho (REUTERS) - While officials of the Federal Reserve have sparred over whether the United States (US) central bank should continue full-bore with its massive bond-buying stimulus, two Fed officials with differing policy views agreed on Thursday that a national debt default could have devastating effects.
Budget gridlock at the US Congress led to an Oct 1 partial government shutdown that threatens to hurt economic growth and has already delayed the release of key economic data such as the September jobs report.
Lawmakers are now locked in debate over how to raise the government's borrowing limit and avoid a US debt default on Oct 17.
Mr John Williams, the president of the San Francisco Fed and a policy centrist, on Thursday said politicians in Washington are playing a "very, very dangerous game" with their brinkmanship, and said the failure of the government to pay its bills could undermine world confidence in the US dollar, and in the extreme could cause a global financial panic.