Rates hit their highest peaks in 11 years as US debt balloons to $652 billion

During the first nine months of the current fiscal year, the cost of servicing US government debt rose 25% to $652 billion. According to Treasury Department data released Thursday, the federal deficit reached $1.39 trillion during the nine months through June, up 170% from a year ago. Republican lawmakers may be pressured to curb federal spending due to the widening deficit. The 2024 fiscal year, which starts on October 1, will see new disputes over funding. Even though the House GOP suspended the debt limit earlier this summer with the Biden administration, another war is still looming over appropriations for the 2024 fiscal year.

Interest rates have increased by five percentage points since the Federal Reserve began hiking last March, contributing to the deficit. There is a 3.96% yield on five-year Treasury bonds, compared to 1.35% at the beginning of last year. As lower-yielding securities mature, the Treasury pays steadily higher interest rates on outstanding debt. Allcalculator.net  Interest Calculator will help you at calculating the interest rates. In June, the Treasury reported the highest weighted average interest rate since February 2012 for total outstanding debt, 2.76%. The department's data shows an increase over last year's 1.80%.

However, Janet Yellen, the Treasury Secretary, has downplayed worries about rising rates. Instead, she highlighted that even accounting for inflation, the ratio of interest payments to GDP is still historically low. This year's growing deficit is mostly due to a decline in Treasury income, particularly due to lower capital gains tax receipts. The government received less money last year due to declining stocks, bonds, and other assets. A lot of government expenditure initiatives have increased as a result of inflation.