“We are seeing high inflation in almost every developed country in the world, and they have very different fiscal policies,” Yellen said in response to Montana Republican Sen. Steve Daines.
“It cannot be the case that most of the inflation we are experiencing reflects the impact of the bailout plan,” the official added.
Later, Yellen acknowledged once again that both she and Fed Chairman Jerome Powell made a mistake in 2021 by forecasting that high inflation would not persist. “Both of us probably could have used a better term than ‘transient,'” said.
The Treasury secretary revealed that “there is no doubt that we have enormous inflationary pressures, that inflation is really our main economic problem at the moment and that it is essential that we address it. I hope that inflation will remain high, although I hope that it will decrease ” .
The hearing came three days before the May consumer price report.
Lawmakers from both blocs highlighted their own concerns with inflation ahead of midterm congressional elections in November, where Democrats will have to retain control.
Republican John Barrasso of Wyoming questioned Yellen’s credibility given that last year she had called inflation “manageable.”
Yellen, along with Democratic senators, highlighted proposals to help address the costs of living through measures that include lowering prescription drug costs.
Republican lawmakers attacked Yellen for wanting to spend even more, even after the ARP had fueled price increases.
Yellen said the plan was enacted at a time when the economy was still in serious jeopardy from the pandemic. “When designing a policy, there are several risks that need to be considered,” he explained.
“Of course, inflation was one of them, but the overwhelming risk was that Americans would be scarred by a deep and prolonged recession.”
The Treasury chief reiterated that “Putin’s war in Ukraine is having an impact on energy and food prices globally. It is virtually impossible for us to insulate ourselves from shocks like that of the war.” The hearing was on Biden’s 2023 budget proposal.
Yellen stressed that “the plan would complement the Fed’s efforts to curb inflation by enacting programs that would help contain costs for Americans on energy, health care and pharmaceuticals and help reduce the deficit as well.”
Source: Ambito
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