by Susan Heavey and David Lawder
WASHINGTON (Reuters) – The U.S. economy is showing strength but some sectors are slowing, Treasury Secretary Janet Yellen said on Wednesday, adding that she expects to see more progress in moderating inflation in the coming months. next two years.
Despite the difficulties in commercial real estate facing banks, the banking system has ample liquidity and should be able to withstand any strain, Janet Yellen said in an interview with CNBC.
She added that the legislation to raise the federal debt ceiling and reduce US deficits by more than $1 trillion over ten years would support the Federal Reserve’s (Fed) efforts to bring down inflation.
Asked about the position of Richmond Fed Chairman Jeffrey Lacker, for whom the federal funds rate should be raised to 6% to curb inflation, the former president of the central bank of the United States replied that this decision was a matter for the institution.
“Consumer spending has continued to grow quite solidly, but there are also sectors of the economy that are slowing down,” she said. “That’s a judgment that my former colleagues at the Fed are quite capable of making. As I said, I think it’s important to try to bring inflation down. That’s a top priority. “.
According to Janet Yellen, banks should experience some difficulties in connection with commercial real estate, which is suffering from rising rates and remote working. But stress tests have shown that banks have adequate capital and supervisors are watching the situation closely.
Regarding possible consolidation in banks, Janet Yellen replied that the current diversity within the sector was a “strength” for the American economy, but that consolidation was likely to continue.
She added that this diversity should not be questioned “but (it) is certain that in the current context, some banks are under pressure on their profits and (that there) is a will to carry out a consolidation”.
(David Lawder and Susan Heavey, French version Laetitia Volga, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters