Former US Treasury Secretary Steven Mnuchin said an agreement is within reach on a debt deal to avoid a catastrophic US default.

Speaking in an interview on Tuesday in Doha on the sidelines of the Qatar Economic Forum, Mnuchin said President Joe Biden and House Speaker Kevin McCarthy “are moving closer.”

Optimism that a deal will be reached soon is rising even as time is growing short.

Treasury Secretary Janet Yellen has warned it’s “highly likely” her department would run out of sufficient cash in early June and that default could come as soon as June 1. Biden and McCarthy remained without a deal on the debt limit Monday night after another round of talks, though they called their discussions productive and vowed to keep negotiating.

The current standoff over the debt ceiling has the potential to put more strain on the US economy, which is already vulnerable after a series of interest-rate increases by the Federal Reserve.

Mnuchin, now managing partner at Liberty Strategic Capital, thinks the Fed is “pretty much done” with rate hikes and may deliver one more. Market expectations of the US central bank lowering borrowing costs are probably “a bit too aggressive,” he said.

The US economy will definitely slow in the coming months as a result of higher interest rates and faster inflation, though a recession can be avoided, Mnuchin said.

“It will be a close call whether we call it a recession or not,” he said.

Over the medium-term, a rebound in the global economy will probably cause an uptick in oil prices, according to Mnuchin.

The former Treasury secretary also said there’s far more interest now from US investors in the Persian Gulf than before, particularly surrounding energy expansion.

Mnuchin’s Liberty Strategic Capital has an office in Tel Aviv, where he said the firm is heavily focused on the Israeli technology sector. He declined to comment on a potential office in the Gulf region.

The government of the State of Qatar is the underwriter of the Qatar Economic Forum, Powered by Bloomberg.

This article was provided by Bloomberg News.