“Putin’s war in Ukraine is affecting energy and food prices worldwide,” Yellen told lawmakers. “We are not the only country with inflation. You can see this in almost every developed country in the world.”
Speaking during a Senate finance committee hearing, Yellen noted the Biden administration’s record release of oil from the strategic oil reserve.
“Energy and petrol prices, although very high, would be higher without it,” Yellen said.
However, the Secretary of the Treasury stressed that the United States is not immune to global energy shocks.
“We are part of the world’s oil markets, which are subject to geopolitical influence. Given the global nature of these markets, it is virtually impossible for us to isolate ourselves from shocks like those happening in Russia that drive world oil prices.” said Yellen. . She added that it was crucial for the United States to become “more dependent on wind and sun, which are not subject to geopolitical influence.”
In his prepared speeches, Yellen acknowledged that the United States is facing “macroeconomic challenges, including unacceptable levels of inflation.”
Yellen called on lawmakers to take action to tackle high inflation.
“I believe Congress can do a lot to alleviate the costs to households,” Yellen said. In particular, she pointed out investments in reducing the cost of prescription medicines, investing in clean energy, investing in affordable housing and helping families with childcare and medical expenses.
It will take time to curb inflation, Yellen said.
“There is no doubt that we have huge inflationary pressures. “Inflation is our main economic problem at the moment,” Yellen told lawmakers. “It is crucial that we deal with it. I really expect inflation to remain high, although I very much hope that it will go down.”
Reiterating his comments to CNN’s Wolf Blitzer last week, Yellen explained that her previous expectation that inflation would be “transient” did not take into account the many variants of Covid-19 disrupting supply chains or Russia’s invasion of Ukraine. .
“As President Powell has pointed out, we could both use a better term than ‘transitional,'” Yellen said, referring to a previous call by Federal Reserve Chairman Jerome Powell to withdraw the term.
Asked if the high inflation could be due in part to the US bailout package signed by President Joe Biden in early 2021, Yellen said the president was deeply concerned about the economy at the time.
“He had to decide what was the right policy to deal with what we all thought at the time was the biggest risk our country was facing: seeing cars queuing in front of food banks. , people are starving, people are starting to lose their roofs. their heads worried that they will not be able to find a job and we will have a generation marked by high unemployment, “said Yellen.
The Treasury Secretary said the United States was facing a “really terrible” problem at the time, with the Congressional Budget Office predicting unemployment at more than 9 percent.
Yellen said the stimulus package managed to deal with economic risks “better than one might expect”, leading to one of the lowest unemployment rates in post-war history.
But Yellen does not seem to share the views of Senator Elizabeth Warren and other progressives who blame corporate greed for higher prices.
Instead, she pointed to other factors.
“I guess I see most of the inflation as a reflection of supply and demand factors,” Yellen told lawmakers. “On the supply side, we had huge problems with the supply chain due to the pandemic and changes in the pattern of consumption of services to goods.
The finance minister also cited “huge increases” in food and energy prices, partly reflecting Russia’s invasion of Ukraine.
Democrat Sen. Sherrod Brown later called for potential examples of corporate greed, arguing that shipping companies, oil companies, drug manufacturers and others had “used the war in Russia to make a profit.” Brown said the big profits of these companies were “not accidental.”
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