Treasury Secretary Janet Yellen said Monday she believes US inflation remains too high but that a soft landing is on the radar.
During an exclusive interview with CNN’s Melissa Bell from Kyiv, Yellen said the Federal Reserve’s efforts to date to bring down inflation while maintaining a strong labor market appear achievable.
“I would say, ‘So far, so good,’” said Yellen, a former Fed chair who led the central bank from 2014-2018.
“Obviously there are risks, and the global situation we face is very uncertain,” she said. “There can be shocks from it. But look, inflation still is too high, but generally if you look over the last year, inflation has been coming down. And I know the Fed is committed to continuing the process of bringing it down to more normal levels, and I believe they’ll be successful with it.”
Yellen was in Kyiv Monday on an unannounced visit for a series of meetings and engagements, including with Ukrainian President Volodymyr Zelensky, to reaffirm the United States’ support of Ukraine and to announce the recent transfer of $1.25 billion in economic and budgetary assistance.
In her interview with Bell, Yellen addressed questions on domestic matters such as inflation and the debt ceiling breach in addition to the effectiveness of sanctions against Russia’s economy.
Yellen said the “extraordinary measures” undertaken by the Treasury Department to delay breaching the debt ceiling will help pay the government’s bills until at least early June.
She said it would be “inconceivable” for the United States — “whose currency, the dollar, serves as the world’s reserve currency; a country with the deepest most liquid financial markets where Treasuries are the ultimate safe asset” and “with a credit rating the United States has always had” — to default on its obligations.
“It’s utterly essential to preserve that to avoid economic and financial catastrophe,” she told CNN.
The only solution for that issue, Yellen said, is for Congress to “meet its responsibility” as it has done in recent history to raise the debt ceiling to pay for spending already authorized.
“Congress has to stand up and say they’re committed to having the government pay the bills that are due,” she said.
Addressing the Russian economy, which has not buckled under an array of sanctions from the United States and other Western countries, Yellen said she expects it to grow weaker as the country loses foreign investment and runs through its reserves and rainy-day funds.
“We will see an increasing toll on Russia’s economic trajectory over time,” she said. “And their ability to replenish the military equipment that’s been destroyed in their attacks on Ukraine, that’s been very greatly jeopardized.”
Still, recent US intelligence has shown that China is considering increasing its support of the Russian economy and war efforts, including supplying drones and ammunition. Such a move would bring “severe” consequences, Yellen said.
“We have been extremely clear that we will not tolerate systematic violations by any country of the sanctions that we have put in place that are intended to deprive Russia of access to military equipment to wage this war,” she said. “And we have been very clear with the Chinese government and have made clear to Chinese firms and financial institutions that the consequences of violating those sanctions would be very severe.”