“Putin’s war in Ukraine is having an impact on global energy and food prices,” Yellen told lawmakers. “We are not the only country experiencing inflation. You can see it in virtually every developed country in the world.”
Speaking during a Senate Finance Committee hearing, Yellen noted the record release of oil from the Biden administration’s Strategic Oil Reserve.
“Energy and gasoline prices, while very high, would be higher without it,” Yellen said.
However, the Secretary of the Treasury stressed that the United States is not immune to global energy shocks.
“It is part of the global oil markets that are subject to geopolitical influences. Given the global nature of these markets, it is virtually impossible for us to isolate ourselves from shocks like those in Russia that are driving world prices. of oil, “Yellen said. . He added that it is crucial that the United States be “more dependent on wind and sun than not subject to geopolitical influences.”
In his prepared remarks, Yellen acknowledged that the United States faces “macroeconomic challenges, including unacceptable levels of inflation.”
Yellen called on lawmakers to take steps to address high inflation.
“I think Congress can do a lot to alleviate the cost burdens that households suffer,” Yellen said. Specifically, he pointed to investments to reduce the costs of prescription drugs, invest in clean energy, invest in affordable housing, and help families with child care expenses and medical costs.
It will take time to control inflation, Yellen said.
“There is no doubt that we have high inflationary pressures. Inflation is our main economic problem right now,” Yellen told lawmakers. “It’s crucial that we deal with it. I hope inflation stays high, although I really expect it to go down.”
Echoing comments he made last week on CNN’s Wolf Blitzer, Yellen explained that his earlier expectation that inflation would be “transient” did not take into account the multiple variants of Covid-19 that mix the chains of supply nor the Russian invasion of Ukraine.
“As President Powell pointed out, we could probably both have used a better term than ‘transient,'” Yellen said, referring to the previous call by Federal Reserve Chairman Jerome Powell to withdraw his term.
Asked if high inflation could be due in part to the stimulus package of the US bailout plan signed by President Joe Biden in early 2021, Yellen said the president was deeply concerned about the economy at that time.
“He had to decide what was the right policy to address what we all thought at the time was the biggest risk facing our country: that we are seeing cars lined up at food banks, people going hungry, people who “They’re starting to lose their roofs, their bosses are worried they can’t find their jobs, and we’re going to have a generation marked by high unemployment,” Yellen said.
The Secretary of the Treasury said the United States was facing a “really horrible” problem at the time, with the Congressional Budget Office projecting unemployment above 9%.
Yellen said the stimulus package managed to address economic risks “better than anyone could have predicted,” resulting in one of the lowest unemployment rates in postwar history.
But Yellen did not seem to share the views of Senator Elizabeth Warren and other progressives who have blamed corporate greed for higher prices.
Instead, he pointed to other factors.
“I guess I see that most of the inflation reflects supply and demand factors,” Yellen told lawmakers. “On the supply side, we have had major supply chain problems due to the pandemic and changes in the pattern of consumption, away from services and towards goods.”
The Secretary of the Treasury also cited “huge increases” in food and energy prices, partly reflecting Russia’s invasion of Ukraine.
Democratic Sen. Sherrod Brown later cited potential examples of corporate greed, arguing that shipping companies, oil companies, drug manufacturers and others have “used the war in Russia for profit.” Brown said the big profits from these companies “are not by chance.”