Speaking with Bloomberg News after the G7 finance ministers’ meeting Yellen said that inflation might be good for the US. She said that if the US ends with slightly higher interest rates, “it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen added.
Yellen is among those who insist that the current price increases are transitory and driven by the pandemic. This includes situations such as supply-chain bottlenecks and a surge in spending as economies reopen. In addition, critics say the flood of money in government aid spending can fuel rising costs.
Biden’s Infrastructure Plan
Specifically, Biden’s infrastructure packages can add roughly $400 billion in spending per year, according to Yellen. She concluded that this amount is not enough to trigger an inflation over-run. In addition, any spikes in prices caused by the stimulus packages will fade away next year, she said.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” Yellen noted. She added that the administration wants to return to a normal interest rate environment. Consequently, “if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing,” she added.
Meanwhile, in the twelve months through April, the headline measure of consumer prices rose 4.2%. Updated figures for May will come out Thursday.
In addition, the Fed committed to scaling back its $120 billion monthly asset purchases after inflation and employment stabilize.
Chairman Jerome Powell took over the Federal Reserve from Yellen in 2018. He continues to stick to his guns about not stopping economic support any time soon. Powell continues to insist that the US will maintain key interest at near-zero rates until 2023.
After a dismal April jobs report, growth rates picked up in May, along with worker pay rates. In addition, unemployment rates fell down to 5.8%, according to a Labor report Friday. “I will not give up on the next packages. They’re not meant as a stimulus, they’re meant as investments to address long-standing needs of our economy,” Yellen added.
Inflation Views
During the G7 meeting, finance ministers from member countries pressed Yellen for her views on inflation. Ultimately, the group agreed with the assessment that inflation will stay transitory.
In addition, Yellen said that monetary policymakers can handle any potential rise in inflation if it happens. “I know that world — they’re very good. I don’t believe they’re going to screw it up,” she concluded.
Watch the US Treasury Department’s video of Sec. Janet Yellen speaking at the close of the G7 meeting:
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1 Comment
Impeach biden