The rise in prices reached 7.5% on a national average over one year in January, its fastest pace in nearly 40 years.
The surge in prices in the United States is not “not tolerable”, acknowledges Treasury Secretary Janet Yellen, while praising Joe Biden’s policy. The minister is now turning to the central bank to slow inflation. “I am worried about inflation” and “it is certainly not tolerable (what) remains at current levels”said the Minister of Economy and Finance, during an interview with AFP.
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Driven by a combination of pandemic-related factors, U.S. inflation hit 7.5% year on year in January, its fastest pace in nearly 40 years, according to the department’s CPI index. work. Rents, cars, meat, gasoline, heating oil, furniture, but also hotels and sporting events, have seen their prices skyrocket over the past year. It’s about “Clearly (of)a big concern for Americans, and it really needs to be addressed.”pointed out Janet Yellen. “We are doing everything we can within the administration (Biden) to address supply chain bottlenecks that drive up prices”she added.
Especially since the crisis between Russia and Ukraine could have “global repercussions”she pointed out, highlighting “the potential impact on energy markets, given Russia’s important role as a supplier of oil for the global market, and of natural gas for Europe“.
We must be aware that we have prevented evictions, we have reduced child poverty (…), we have reduced food insecurity. »
Janet Yellen
The minister also defended the economic policy of Joe Biden, accused by the Republican opposition of having fueled soaring prices in the United States. In the sights of the Republicans, the 1900 billion dollars of the American Rescue Plan, the emergency aid plan including the distribution of generous checks to millions of households that the president had adopted upon his arrival at the White House , in March 2021.
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The Fed “has an important role to play”
But for Janet Yellen, it mainly helped to avoid much greater economic damage and a rapid recovery. She points out that the United States today has “a very solid labor market, a very low unemployment rate”. At 4% in January, it is approaching 3.5%, almost full employment. “You have to be aware that we have prevented evictions, we have reduced child poverty (…), we have reduced food insecurity”she continued.
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“We have put in place a set of support measures that allow us to still cope with the pandemic and bring our economy back to normal. But yes, inflation is a concern”, she conceded. All eyes are now on the central bank, the Fed, which “also has an important role to play”, according to Janet Yellen. She renewed her “confidence” in the monetary institution “to deploy its tools appropriately”.
That is to say, to fight against inflation, without slowing down the economic recovery and the growth of employment. The Fed is preparing to raise its key rates next month, at a pace that could be much faster than expected. It had lowered them to almost 0 two years ago, to encourage households to consume and businesses to invest, thus stimulating the economy. “If the pandemic recedes and we put in place appropriate policies, I expect inflation to slow down”said Joe Biden’s Minister of Economy and Finance.
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In any event, it will take at least several months before the rate hike has an impact, according to most economists. The Minister remains convinced that the government must continue to support the economic recovery and has again pleaded in favor of the gigantic plan of investment in infrastructure and social spending wanted by Joe Biden, Build Back Better, currently paralyzed in Congress. “The pandemic is not over (…) and (US) state and local governments, as well as the federal government, still need to continue to respond and will do so for years to come”she promised.
In addition, Janet Yellen said she hoped “more active participation from Chinaon debt relief for poor countries, the Asian giant being one of their main creditors. Debt for the poor has surged with the pandemic but the Treasury Secretary lamented “slow work from china“.
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