On Thursday before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell said the global economy could suffer if Congress doesn't raise the federal debt limit.
The debt ceiling puts a cap on how much money the U.S. can borrow to pay its bills. If the debt ceiling isn't raised, the U.S. could default on its debt.
During his testimony, Powell said raising the debt ceiling "simply must happen." Congress and the White House have until lawmakers leave for summer recess to reach a deal. Right now, the House is set to leave July 26. The Senate will leave a week later. If they don't reach a deal before then, it will have to wait until they get back in September. At least one projection shows the U.S. hitting the debt ceiling by early or mid-September.
Powell's Senate testimony wrapped up two days worth of testimony on Capitol Hill. On Wednesday, before the House Financial Services Committee, Powell hinted the Fed will likely cut interest rates later this month. Interest rates affect how much money people borrow. The higher the interest rates, the less people borrow. The lower the rates, the more people borrow.
It's been a little over a decade since the Fed cut rates. The last time it cut rates was in 2008 — the year of the global financial crisis.
Additional reporting from Newsy affiliate CNN.