(Bloomberg) — Former US Treasury Secretary Steven Mnuchin said a compromise is within reach on the debt deal to avoid a catastrophic US default.
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Speaking in an interview Tuesday in Doha on the sidelines of the Qatar Economic Forum, Mnuchin said President Joe Biden and House Speaker Kevin McCarthy are “getting closer.”
Optimism that a deal will be completed soon, even if time is running out.
Treasury Secretary Janet Yellen has warned that it is “highly likely” that her department will run out of sufficient cash by early June and that a default could come as soon as June 1. talks, though he described their discussions as productive and vowed to continue talks.
The current impasse over the debt ceiling has the potential to put further pressure on the US economy, which is already weak after a series of interest rate hikes by the Federal Reserve.
Read more: Biden-McCarthy loan talks end on optimism, but no deal
Mnuchin, now a managing partner at Liberty Strategic Capital, thinks the Fed is “pretty done” with rate hikes and may deliver another. Market expectations of the US central bank lowering borrowing costs are probably “a little too aggressive”, he said.
Mnuchin said the US economy would certainly slow in the coming months as a result of higher interest rates and faster inflation, although a recession could be avoided.
“Whether we call it a recession or not is going to be a close call,” he said.
According to Mnuchin, in the medium term, a rebound in the global economy will probably lead to a rally in oil prices.
The former Treasury secretary also said that there is more interest from American investors in the Persian Gulf now than ever before, especially around energy expansion.
Mnuchin’s Liberty Strategic Capital has an office in Tel Aviv, where he said the firm is focusing heavily on the Israeli technology sector. He declined to comment on a potential office in the Bay Area.
The Government of the State of Qatar is the underwriter of the Qatar Economic Forum, powered by Bloomberg.
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