FX.co ★ Dollar weakens as US debt rises. Interest rates could go higher than 5%

Growing uncertainty has caused US equities to fall, with all three major indices down a full percentage point. Meanwhile, gold rose strongly and almost gained as much as 1.5%.

The move came after reports emerged that the US already reached the debt ceiling set by the Congress. According to the data, it now exceeds $ 31 trillion, which is likely to force Treasury Secretary Janet Yellen to take "extraordinary measures", such as not paying all of the country's bills. It will also prompt Yellen to send a letter to the Congressional leadership, following the one she already sent last January 13, when she urged the Congress to act immediately in order to protect the full faith and credit of the United States.

Despite this, Fed officials continue to highlight the need for further rate hikes as it is a key tool to address and lower the current rate of inflation. The bank has announced its plan to raise the benchmark rate above 5% even though recent data indicates that inflationary pressures may have peaked.

Markets are becoming increasingly concerned because previously, the political administration has been slow to act, either postponing a solution or only proposing to raise the debt ceiling. Persistently high inflation can only make the problem worse.