“I’m sorry for not being able to reduce the U.S. fiscal deficit more.”
“I think any action that undermines the independence of the Federal Reserve is a mistake.”
U.S. Treasury Secretary Janet Yellen,who is about a month away from taking office,warned that President-elect Donald Trump’s tariff policy would worsen inflation,which had been stabilizing,once again.
Secretary Yellen attended the Wall Street Journal (WSJ) CEO Council Summit on the 10th (local time) and said that tariffs “could substantially raise prices for American consumers and increase the cost burden on companies that rely on imported goods.” revealed.
Secretary Yellen saw some value in targeted tariffs on Chinese goods as a response to China’s unfair trade practices, such as those implemented by the Joe Biden administration.
However, he pointed out that President-elect Trump’s tariff measures are so broad that they could “reduce the competitiveness of certain sectors of the U.S. economy and increase household costs.”
“It could ‘derail’ the progress we have made on inflation and could have negative consequences for growth,” he said.
Secretary Yellen said she was “sorry” for not being able to reduce the U.S. fiscal deficit more during her term,and urged the next government to make efforts to reduce the fiscal deficit as national debt continues to rapidly increase and the high interest rate environment continues.
In particular, Minister Yellen defended the independence of the Federal Reserve System (Fed). He explained that the country’s economic performance is better when the Fed can exercise its best judgment without political influence.
Secretary Yellen emphasized, “I think it would be a mistake to comment on the Federal Reserve and interfere with Federal Reserve policy, and certainly a mistake to take steps that would undermine the independence of the Federal Reserve.”
“This tends to undermine trust in financial markets and ultimately Americans’ trust in important institutions,” he added.
This is interpreted as a criticism of President-elect Trump’s comments suggesting that he would intervene in the Federal Reserve during the presidential election.
President-elect Trump has made remarks to the effect that he could exert influence on the Federal Reserve’s decision-making if he returns to power during the presidential election, including saying in August, “I think the president should have at least a say in the Federal reserve’s interest rate decision.”
In addition, Secretary Yellen said she had a phone call with the next Treasury Secretary nominee, billionaire hedge fund manager Scott Bessent, and congratulated him on his nomination.
Simultaneously occurring, Secretary Yellen will step down from her position as Treasury Secretary on January 19th of next year.
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What are the implications of tariff policies on consumer prices and inflation according to economic experts?
Interview between Time.news Editor and Economic Expert
Editor: Welcome to Time.news,where we delve into the critical issues shaping our economic landscape. Today, I have the pleasure of speaking with Dr. Sarah Thompson, an esteemed economist and advisor who has closely followed U.S. fiscal policies and trade issues. Thank you for joining us,Dr. Thompson!
Dr. Thompson: Thank you for having me! It’s a pleasure to be here.
Editor: Let’s start with the recent comments made by U.S. Treasury Secretary Janet Yellen about the potential impacts of President-elect Donald Trump’s proposed tariff policy. She expressed concerns that these tariffs could worsen inflation, which had been stabilizing.What are your thoughts on her assessment?
Dr. Thompson: Secretary Yellen raises valid points. Tariffs can indeed create inflationary pressures by raising costs for both consumers and businesses. When imported goods, which many businesses rely on, become more expensive, these costs are frequently enough passed on to consumers. This could erode the recent gains we’ve made in stabilizing inflation.
Editor: She also mentioned that Trump’s tariff measures are too broad and could “reduce the competitiveness of certain sectors.” Can you elaborate on which sectors might be notably vulnerable?
Dr. Thompson: Absolutely. Sectors that heavily depend on imported materials—like manufacturing, technology, and even agriculture—could face notable challenges. As an example, if the cost of raw materials rises due to tariffs, manufacturers might struggle to maintain their profit margins, leading to higher consumer prices or even layoffs. this could have a cascading effect on economic growth.
Editor: Yellen expressed her regret for not being able to reduce the U.S. fiscal deficit more during her term. With the national debt on the rise, what measures do you think the next governance should prioritize to address this issue?
Dr. Thompson: The next administration should focus on a balanced approach that includes both spending reductions and revenue enhancements. Investments in growth sectors can help increase revenues over time, but its equally important to identify areas where spending can be trimmed without undermining essential services or economic recovery.
Editor: On the subject of the federal Reserve, Yellen emphasized the need for its independence and warned against political interference in its operations. Why is this independence so crucial for a stable economy?
Dr. Thompson: The independence of the Federal Reserve is vital because it allows the Fed to make decisions based on economic data rather than political pressure. When the Fed can act without fear of political repercussions, it helps maintain trust in financial markets. This trust is essential for a functioning economy, as it affects everything from consumer spending to investment decisions.
Editor: Yellen cautioned that undermining the Fed’s independence could have dire consequences for market trust. could you explain how this could play out in practical terms?
Dr.thompson: Certainly. If investors perceive that the Fed’s decisions are influenced by political motivations, it may lead to increased volatility in financial markets. For example, if interest rates are altered to satisfy political agendas rather than economic necessity, it could undermine investor confidence, leading to fluctuations in stock prices and possibly triggering a broader economic downturn.
Editor: Thank you for those insights, Dr. Thompson. As we look to the future, what do you think is the greatest challenge the incoming administration will face in navigating these economic issues?
Dr. Thompson: The greatest challenge will likely be balancing policy responses that stimulate growth while addressing inflation and fiscal duty. This delicate balance requires careful analysis and a willingness to adapt to rapidly changing economic conditions.Clear communication and maintaining trust with both the public and markets will be crucial.
editor: Thank you, Dr. Thompson, for sharing your expertise with us today. It’s clear that the economic landscape is complex and ever-evolving,and your insights are invaluable as we navigate these turbulent times.
Dr. Thompson: Thank you for having me. It’s essential to continue these conversations as we move forward.