U.S. Treasury Secretary Janet Yellen in her latest interview with Bloomberg news said that President Joe Biden’s spending proposal of $4 trillion would be positive for the nation, even if this spending leads to a rise in interest rates in the country.
The former Federal Reserve chair expressed that President Biden’s plans would be about a total of $400 billion each year and this is a level of spending she argued that was not sufficient to create inflation in the long run.
Yellen also expressed to Bloomberg that even if we end up with a little bit higher interest rate then it would actually be positive from the country’s point of view and also from the Fed’s point of view.
She said, “We’ve been fighting the inflation that’s extremely low and interest rates that are also very low now almost for a decade.” She added “If the packages offer any help at all to “alleviate the things then that is not a bad thing but that’s a good thing.”
The debate around inflation is quite intensified in the last months, between those like Janet Yellen who is arguing that the current price rises are being driven due to transitory anomalies that are created by the Covid-19 pandemic like supply-chain bottlenecks and also due to increase in spending as the economy is reopening, and on the other side critics who thinks that the government aid of $4 trillion could give rise to a lasting spike in costs.
