Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Yellen Says U.S. Inflation Risk Remains Small, ‘Manageable’

Published 03/14/2021, 10:37 PM
Updated 03/14/2021, 10:54 PM
© Reuters.

(Bloomberg) -- Treasury Secretary Janet Yellen said U.S. inflation risks remain subdued as the Biden administration pumps $1.9 trillion in pandemic relief into the economy and a return to full employment comes into view.

“Is there a risk of inflation? I think there’s a small risk and I think it’s manageable,” Yellen said on ABC’s “This Week” on Sunday. Some prices that fell last year when the Covid-19 pandemic spread through the U.S. will recover, “but that’s a temporary movement in prices,” she said.

“I don’t think it’s a significant risk,” said Yellen, a former Federal Reserve chair. “And if it materializes, we’ll certainly monitor for it but we have tools to address it.”

Biden on Thursday signed into law the pandemic relief package, which provides funding for vaccinations and delivering aid to households, businesses and state and local governments.

Yellen and other officials insist the aid -- which comes on top of pandemic relief passed by Congress last year -- is badly needed for an economy slammed by Covid-19, particularly low-income workers heavily represented in service industries, despite signs of recovery.

While U.S. unemployment remains high, especially when including people who have dropped out of the labor force in the past year, job creation has returned.

Employers added 379,000 new positions in February, more than expected. Applications for U.S. jobless benefits fell by more than forecast last week to the lowest since early November, the Labor Department reported Thursday.

“I’m hopeful that, if we defeat the pandemic, that we can have the economy back near full employment next year,” Yellen said Sunday. “And I think this is the package we need to do that.”

Bathtub Overflow?

Republicans have objected to the stimulus package’s size, and even some liberal economists such as former Treasury Secretary Lawrence Summers have questioned whether its spending is excessive given that the broader economy has been remarkably resilient.

“If you put too much water in the bathtub it starts to overflow,” Summers said Sunday on CNN about the scale of the stimulus. “We’re trying to pour too much water in.”

While saying her views on fiscal sustainability have shifted in an era of persistently low interest rates, Yellen said “in the longer run, we have to get deficits under control.”

Also on ABC, House Speaker Nancy Pelosi said that a planned package of infrastructure measures, the Biden administration’s next big project for the economy, will be “fiscally sound.”

While suggesting revenue measures could include something similar to the Obama administration’s Build America bonds, she declined to confirm that tax increases will be required.

“We’ll see,” Pelosi said. “We’ll look at everything. We’ll look at the tax code, we’ll look at the appropriations process, we’ll look at bonding.”

©2021 Bloomberg L.P.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.