President Biden and Janet Yellen agreed late last year she will stay on as secretary of the Treasury, according to an administration official.

Why it matters: White House officials in the fall of last year had been preparing for Yellen's potential departure after the 2022 midterms, depending in part on the outcome of the elections, Axios' Hans Nichols reports.

• In a December conversation, Yellen brought up the reports about her potential exit and she asked Biden if he wanted her to stay. Biden responded that he did.
• The decision to keep Yellen in the role avoids an immediate political headache for the Biden administration in finding a successor who could be confirmed by the Senate.

The big picture: A major issue coming the Treasury's way is the need to raise the government’s debt limit later this year.

• Republicans, who retook the House in the midterms, have threatened to not raise the debt ceiling to force spending cuts in the federal budget, even if it damages the global economy through the U.S. defaulting on its loans, which has never before occurred.
• Yellen, during a 2021 showdown over the debt ceiling, called on Congress to pass increases to the limit "through regular order, with broad bipartisan support," though that was before Republicans held a majority in the House.
• The debt ceiling does not determine how much the government spends but only how much the government can borrow to pay for spending already approved by Congress.
• Republicans and Democrats worked together to raise the borrowing limit three times throughout the Trump administration and several times in other previous administrations.

Go deeper: Some Republicans expect rocky road for McCarthy's speakership