US Debt Risks Loom Large Ahead of G20 Meeting Amid Inflation Concerns

The upcoming G20 Finance Ministers and Central Bank Governors meeting is expected to focus on global economic imbalances and sanctions against Iran, but the US itself faces a policy contradiction. The country's inflation rate has persistently remained above target, making it difficult for the Federal Reserve to quickly ease monetary policy.

In an interview with CNBC, Harvard University economics professor and former IMF chief economist Kenneth Rogoff warned of long-term US debt risks, stating: 'The biggest threat over, say, the next five to 10 years is from the inside that we just aren't prepared to balance our budget. I think we will have some kind of debt crisis, financial repression, inflation, maybe something more dramatic.'

The 30-year US Treasury yield briefly hit a 19-year high recently, and a massive volume of debt issued during past low-interest-rate eras is coming due, requiring new debt to be refinanced at today's higher market rates. This means that even without accounting for new spending, interest costs borne by the US government are likely to continue rising as older debt is progressively replaced by higher-cost paper.