InstaForex

September 28, 2021

US Senate Fails to Raise Debt Limit, Threat of ‘Government Shutdown’ Returns

 The United States (US) needs to raise the debt ceiling and ensure that the government continues to be funded until December. However, the Republican party in the Senate had blocked the effort when the vote was made on Monday.


With 60 votes needed to approve the move, only 48 votes from senators agreed to go ahead and another 50 votes against.


This has caused investors to worry if the US fails to raise the debt limit on September 30, as it could lead to a ‘government shutdown’.



If this happens, government offices that are categorized as insignificant will be closed due to lack of funds.


When government operations slow down or are stopped, it will affect business in the government sector, as well as the entire economy will also receive the same effect.


Federal Reserve (Fed) policymaker John Williams warned that the move could lead to investment outflows and hurt financial markets.


Republicans are reluctant to support raising the debt limit because neither they disagree with Democrats ’plans to spend trillions of funds on President Joe Biden’s economic plans.