Treasury Secretary Janet Yellen dismissed fears that President Joe Biden’s $1.9 trillion pandemic-relief bill is so big that it will cause an inflation problem.
“I really don’t think that’s going to happen,” Yellen said in an interview with MSNBC Monday, when asked about concerns that consumer-price pressures could surge as a result of deploying the stimulus despite the economy already gathering pace. Inflation before the pandemic “was too low rather than too high,” she noted.
House Speaker Nancy Pelosi predicted her chamber would approve the stimulus package on Tuesday, following Saturday’s passage in the Senate. Treasury yields have soared over the past month as investors built into their outlook a faster trajectory for economic growth and prices in the wake of the bigger-than-expected spending bill.
The Treasury chief, a former head of the Federal Reserve, reiterated that policy makers are equipped to address any challenge with price gains, should that emerge.
“If it turns out to be inflationary, there are tools to deal with that,” Yellen said.
She also reiterated her expectation for the relief plan to return the U.S. to “full employment” next year. Payrolls remain down by more than 9 million compared with the peak before Covid-19 struck.
Yellen said the legislation provides hundreds of millions of Americans the “help they need” to cope with the pandemic.
Once the bill is passed, the agenda will turn to address underlying problems in the economy that have contributed to inequality, Yellen said.
This article was provided by Bloomberg News.