US Treasury Secretary: High interest rates test US debt

The prospect of interest rates remaining high in the long run made it harder to rein in America's borrowing needs, underscoring the importance of focusing on raising revenue in budget negotiations with Republican lawmakers, Treasury secretary Janet Yellen said. "We have raised our expectations for interest rates, and that does have an impact," she said. "That makes it more challenging to keep deficits and interest payments under control." She reiterated her emphasis on the inflation-adjusted ratio of interest payments to GDP, which has risen over the past year but the White House expects to stabilize at around 1.3 per cent over the next decade. "I don't have a hard and fast rule, but I don't want to see it go above 2 per cent," she said, in her clearest comments on the measure so far.