Treasury Secretary Janet Yellen recently addressed concerns about the U.S. national debt, stating that it is currently at a manageable level relative to the size of the economy. In an interview with CNBC, Yellen emphasized the importance of stabilizing the debt-to-GDP ratio to ensure the country remains in a ‘reasonable place’ financially.

Yellen highlighted the impact of high interest rates on the growing debt burden, noting that the real interest cost of the debt is a key factor to consider. With the national debt standing at $34.7 trillion, concerns have been raised about the sustainability of the current financial situation.

Despite the significant debt load, Yellen expressed confidence in President Joe Biden’s plans to address the issue. The proposed budget for the upcoming fiscal year includes $3 trillion in deficit reduction over the next decade, aimed at stabilizing the debt-to-income ratio and managing the interest burden.

However, reports from the Congressional Budget Office have warned about the escalating costs of debt and deficits. The public share of the national debt, currently at $27.6 trillion, is projected to reach record levels as a percentage of the total economy in the coming years.

Yellen’s remarks come against the backdrop of rising financing costs for the debt, driven in part by the Federal Reserve’s efforts to combat inflation. Despite recent declines in inflation rates, the Fed has maintained higher interest rates to ensure price stability.

Looking ahead, Yellen refrained from commenting on the Fed’s future actions but reiterated the administration’s commitment to addressing inflation concerns. With ongoing efforts to manage the debt and deficits, the government aims to navigate the economic challenges posed by the current financial landscape.