G-7 finance chiefs tackle global challenges; Yellen seeks to reassure on debt standoff | Elaine Kurtenbach / AP Business Writer

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The financial leaders of the Group of Seven wealthy nations meet in Japan beginning Thursday as a standoff over the US debt ceiling looms as one of the biggest potential threats to the global economy. Know more:

NIIGATA, Japan—The financial leaders of the Group of Seven wealthy nations meet in Japan beginning Thursday as a standoff over the US debt ceiling looms as one of the biggest potential threats to the global economy.

Yellen also is bound to be seeking to reassure her counterparts over recent bank failures that have raised worries over risks for the global financial system. Biden said he was “absolutely certain” that the country could avert a default, declaring that failure to meet America’s obligations, upon which much of the world’s finances are based, “is not an option.”

She said Biden’s “historic” investments in modernizing US infrastructure were a step toward improving the resilience of an economy whose reliance on global supply chains was sorely tested during the Covid-19 pandemic. The Federal Reserve said in a report this week that US banks raised their lending standards for business and consumer loans in the aftermath of three large bank failures that were in part brought on by the central bank’s sharp increases in interest rates to beat down inflation that surge to four-decade highs after the pandemic.

Inflation has remained stubbornly high. Consumer prices in the United States rose 0.4 percent in April, up sharply from a 0.1 percent rise from February to March, and measures of underlying inflation stayed high, a sign that further declines in inflation are likely to be slow and bumpy even though the annual increase of 4.9 percent was the smallest in two years.

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