She feels that interest rates have been depressed a bit too long….
And that an increase in the rates maybe a sort of brake against inflation that IS already here with the recovering economy from the pandemic pause….
Treasury Secretary Janet Yellen on Sunday said higher interest rates in the U.S. would be a “plus,” urging the president to move ahead with his $4 trillion spending plan even if it causes prices to rise.
“If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said in an interview with Bloomberg News after her meeting with the Group of Seven finance ministers in London.
Yellen, who served as the chair of the Federal Reserve from 2014 to 2018, said Biden’s packages come to a total of about $400 billion in spending per year, which she argues is not enough to trigger an inflation over-run.
She said any “spurt” in prices that come as a result of the rescue package will dissolve next year, according to Bloomberg.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” Yellen said, adding that “we want them to go back to” a normal interest rate environment, “and if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing.”
Yellen’s comments to Bloomberg come about a month after she said interest rates may need to increase to keep the recovering economy from going into overdrive amid the increase in government spending….
image…Greg Nash