UPDATE 1-Treasury not expecting extraordinary measures on Jan 2 to prevent US from defaulting

Adds background in final two paragraphs

WASHINGTON, Dec 27 (Reuters) - The U.S. Treasury does not expect it will be necessary to start taking extraordinary measures on Jan. 2 to prevent the United States from defaulting on its obligations, Treasury Secretary Janet Yellen said in a letter to lawmakers on Friday.

Yellen wrote the United States' debt is expected to decrease by about $54 billion on Jan. 2 "due to a scheduled redemption of nonmarketable securities held by a federal trust fund associated with Medicare payments."

"Treasury currently expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures," Yellen wrote, while urging Congress to act to protect the credit of the United States.

Under a 2023 budget deal, Congress suspended the debt ceiling until Jan. 1, 2025. The U.S. Treasury will be able to pay its bills for several more months, but Congress will have to address the issue at some point next year.

Failure to act could prevent the Treasury from paying its debts. A U.S. debt default would likely have severe consequences.

(Reporting by Jasper Ward and Kanishka Singh; Editing by Chris Reese)

((Jasper.Ward@thomsonreuters.com;))