Treasury Secretary Janet Yellen on Tuesday said she does not believe an increase in rates is necessary to address inflation concerns brought about by President Joe Biden’s spending plans, the WSJ said.
- Yellen said the stimulus released starting March is being monitored closely, but she does not believe there is going to be an inflationary problem.
- Should there be inflationary concerns, Yellen said the Fed can be counted on to address it but maintained that inflation is only transitory.
- The former Fed Chair expects to see upward prices in the next six months on supply-chain concerns, higher energy prices, and reignited demand for workers as more businesses reopen.
- Several economists flagged that the $1.9-trillion COVID-19 relief enacted in March could prompt unwelcome inflation and cause the economy to overheat.
- Yellen said this is being monitored closely but raising rates to address this is not recommended as economic activity resumes.
- “I really feel that this is necessary to make sure that the pandemic doesn’t result in permanent scarring of workers and families in our economy, that we’re able to get back on track quickly,” she said.
- The White House agreed with Yellen, as it said inflationary risks are taken seriously and economic experts see this as temporary, with benefits outweighing concerns.