U.S. Debt Hits Record $40 Trillion as Fed Signals Possible Hike

U.S. gross federal debt surpassed $40 trillion on Aug. 19, Treasury data showed, marking a record as borrowing costs and inflation concerns pressure financial markets. The debt totaled $40.047 trillion on Tuesday, including $32.266 trillion held by the public and $7.782 trillion in intragovernmental holdings, Reuters reported from Treasury data. Separately, minutes from the Federal Reserve’s July 28-29 meeting showed many policymakers believed further tightening could be necessary if inflation failed to decline toward the Fed’s 2% target. The Fed held its policy rate at 3.50%-3.75%, with three officials favoring a quarter-point increase. Treasury Secretary Scott Bessent also announced larger buybacks of longer-term government debt after the 30-year Treasury yield reached a 19-year high. The buyback maximum will rise to at least $4 billion per operation beginning Sept. 9. The measures address market liquidity, but do not resolve the underlying fiscal deficit or determine whether the Fed will raise rates.