U.S. Treasury Secretary Janet Yellen said in an interview Sunday that higher interest rates would be “a plus” for policy makers.
Speaking with Bloomberg News following a G-7 finance ministers’ meeting in London, Yellen said it’s OK if President Joe Biden’s $4 trillion spending plans trigger inflation and higher rates.
“If we ended up with a slightly higher interest-rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” she told Bloomberg.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” she said. “We want them to go back to” a normal environment, “and if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing.”
The Fed has said it won’t start to scale back its $120 billion-a-month asset purchases until the economy had made “substantial further progress” toward the Fed’s goals of full employment and stable long-run 2% inflation.
While indicators of inflation have been rising, bond yields have been subdued, leaving many experts skeptical that a “taper tantrum” in in the cards whenever the Fed starts paring back its purchases.
