As the Federal Reserve raises interest rates to the highest level since the 2008 financial crisis, the White House is trying to find a way to fight inflation without sending the country into a full-scale recession.
“I believe there is a way through this,” Treasury Secretary Janet Yellen told The Atlantic on Thursday. “I think of a full-scale recession as a time when there’s excessive unemployment. You don’t have a strong labor market. We have one of the tightest labor markets right now.”
Yellen predicts that inflation will finally be brought under control next year.
“There are risks. The Russian invasion of Ukraine is not over. We see Putin weaponizing oil and gas,” Yellen said. “We will remain vulnerable to supply shocks.”
YELLEN SAYS FED CAN CONTROL INFLATION WITHOUT CRUSHING LABOR MARKET
Yellen is keeping tabs on the distribution of Russian oil reserves in the global market as the United States tries to shore up its energy capabilities.
“Russia is now very aggressively looking for places to sell their oil. They are giving huge discounts to China and India, which were two big buyers,” Yellen said.
In building a clean energy future, Beijing remains an obstacle, despite the bipartisan CHIPS law that is bolstering confidence in domestic semiconductor manufacturing.
“There are rare earths, solar panels, batteries, electric battery components that we are really too dependent on China for,” Yellen said.
To create a smooth transition to clean energy, Yellen says the United States must ensure that “communities that depend on and have depended on fossil fuels are not left behind.”
Biden earmarked a record $360 billion in the Cut Inflation Act for climate change measures. The White House must now propose a green energy transition to the entire nation.
FEDERAL RESERVE RAISES INTEREST RATES BY 75 BASIS POINTS FOR THIRD CONSECUTIVE MONTH
“It’s important because I really think it’s contributed to the polarization of the country to have, especially the coasts, growing rapidly,” Yellen said. “Of course, with rising house prices in these areas, they don’t have it that easy.”
Over the past year, mortgage rates have doubled and the 30-year fixed rate mortgage is above 6% for the first time since 2008.
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According to a new Fox News poll, 78% of voters say inflation has caused financial hardship. Fifty-nine percent of voters are also “extremely” concerned about inflation and rising prices.
While the Federal Reserve warns that Americans will have to endure rising unemployment and higher interest rates, it will be some time before consumers can feel any economic relief.