Yellen, US Treasury Secretary: "No Repeat of 1970s Inflation... Fed Will Intervene if Necessary"

"High Inflation Will Not Persist Next Year"

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] U.S. Treasury Secretary Janet Yellen stated that the United States will not experience high inflation like in the 1970s and that the Federal Reserve (Fed) will take action if necessary to curb inflation.

According to Bloomberg on the 9th (local time), Secretary Yellen made these remarks during an interview with the U.S. public radio NPR's "Marketplace."

As the COVID-19 situation gradually subsides, Yellen said, "We expect price increases to level off and return to an inflation rate close to 2%, which we consider normal."

She explained, "Once the COVID crisis ends, more people will return to work, consumer demand will return to normal, and the upward pressure on goods prices and wages will ease."

Regarding the persistent high inflation in the 1970s and 1980s, Yellen said, "It was because policymakers allowed the idea that high inflation would not end to take root in people's minds," adding, "That is not the case now, and the Fed will not allow such a thing."

Yellen also reportedly said in a speech at the University of Nevada, Las Vegas economic conference that the recently approved infrastructure budget law by Congress will increase U.S. productivity and labor force size, according to major foreign media.

She said, "I believe the passage of these laws will not only increase our productivity but also expand the labor force and positively change various indicators."

She also emphasized that the Biden administration's "Build Back Better" bill will bring many American mothers back into the labor market.

Regarding President Joe Biden's key initiative to increase taxes on the wealthy, she said, "Our efforts to ensure that the wealthy pay what they owe could conservatively increase tax revenue by $400 billion."

She continued, "Simply closing the tax loopholes used by the wealthy would bring in an additional $400 billion in revenue, and applying a progressive tax to high earners making over $10 million annually would add another $200 billion in tax revenue."