In a recent interview US Treasury Secretary Janet Yellen says interest rates “may” have to rise.
In an interview with the Atlantic Yellen states:
“It may be that interest rates have to rise somewhat to make sure that our economy doesn’t
overheat”
“It could cause some very modest increases in interest rates,”
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Yellen who is the former chair of US central bank the Federal Reserve from 2014-2018 made the
comments in response to ongoing questions surrounding the multi-trillion dollar Covid and
infrastructure stimulus packages.
The size of Biden’s spending plans “are substantially less” than the financial crisis’ Asset Relief
Program bail-out of 2008, Yellen told The Atlantic.
“We have proposed to pay for (spending with) higher taxes on the top 3/10ths of the top 1
percent” and “improve tax compliance”
The comments which were broadcast last Tuesday initially spooked the financial markets but
then in separate online event hosted by Wall Street Journal it seems she then backtracks about
interest-rate rises stating:
“It’s not something I’m predicting or recommending,”
The Biden administration has proposed additional spending packages of up to $4 Trillion on top
of the $1.9 Trillion that has already been injected into the US economy since March.
It seems interest rates will be a hot topic in 2021 and beyond. Read more about interest rates here.