WASHINGTON – Treasury Secretary Janet Yellen said she remains hopeful the US economy can avoid a recession, but added that Americans understand the Federal Reserve’s need to overcome inflation.
“It’s going to take a lot of skill and luck for the Fed to achieve what we sometimes call a soft landing,” Yellen said in an interview on CNN’s State of the Union on Sunday.
“I hope we get a soft landing, but Americans know it’s important to bring inflation down and we can’t have a strong labor market in the long run unless inflation is controlled,” she said.
Those comments echo Fed Chair Jerome Powell, who said last week that he and his policy colleagues at the central bank are “strongly committed” to taming inflation, which remains near a 40-year high.
His words prompted investors to upgrade expectations for a third straight rate hike by three-quarters of a percentage point at the September 20-21 Fed monetary policy meeting.
Yellen said President Joe Biden’s administration will leave monetary policy to the Fed. “I think our goals are very well aligned,” she said. “We want a strong labor market and inflation falling to more normal levels.”
The Treasury chief also said the US economy’s growth rate is slowing, a natural consequence of rising interest rates, although the job market remained “exceptionally strong” with nearly two open positions for every job-seeker.
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