Yellen Optimistic on US Economy, Dismisses Stagflation Concerns

116

In an interview broadcasted on Wednesday, US Treasury Secretary Janet Yellen expressed confidence that the US economy is unlikely to experience stagflation, countering recent concerns raised by JPMorgan Chase CEO Jamie Dimon. Yellen cited forecasts indicating a cooling of inflation, particularly as housing costs are anticipated to decrease. Highlighting housing costs as the primary contributor to inflation, Yellen noted a decline in rental prices for new apartments in many areas across the country. She emphasized her expectation for housing costs to decrease this year, alleviating price pressures.

Yellen acknowledged her previous characterization of inflation as “transitory,” expressing regret as price increases have persisted longer than anticipated. While consumer inflation has moderated from its peak in 2022, February saw an unexpected acceleration to 3.2%, indicating challenges in stabilizing prices.

Regarding the dollar’s status as a reserve currency, Yellen emphasized the unmatched depth and liquidity of US financial markets and Treasuries, along with the robust institutional and legal framework supporting the dollar’s global use.

During her trip to Kentucky to promote President Joe Biden’s economic initiatives, Yellen highlighted investments in clean energy and manufacturing, noting nearly $650 billion in investments announced by companies since the start of the Biden administration. She emphasized the Treasury Department’s efforts to raise awareness among cities about benefits such as tax credits under the Inflation Reduction Act.