Washington, Jun 7 (EFE).- US Treasury Secretary Janet Yellen said Tuesday that the country’s current inflation rate is “unacceptable” and proposed to combat it with measures affecting the energy and prescription drug markets to complement the actions of the Federal Reserve.
Yellen testified before the Senate Finance Committee in a session at which lawmakers initially dealt with budgetary questions, although most of the senators, especially the Republicans, time and again brought up the elevated inflation rate.
“We currently face macroeconomic challenges, including unacceptable levels of inflation as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chains, and the effects of supply side disturbances to oil and food markets resulting from Russia’s war in Ukraine,” she told lawmakers.
Yellen’s linkage of the higher prices currently being paid by Americans – especially for necessary consumer products like gasoline and food – to Russia’s invasion of Ukraine is a strategy that the White House has been pursuing for months trying to anchor it in the public consciousness.
With this aim in mind, US government officials have been regularly referring to inflation as the “Putin price hike,” referring to Russian President Vladimir Putin, although prices had already been rising for several months before Moscow launched its Feb. 24 invasion of Ukraine.
As measures the administration can propose to alleviate inflationary pressures, Yellen mentioned increasing efforts to bring clean energy production methods online along with reforms to the prescription drug market, initiatives for which it will be difficult to get any GOP backing in Congress.
She also insisted on the idea that the Joe Biden administration is being respectful of the decisions being taken by the Federal Reserve, which since March has undertaken a contractionary monetary policy with consecutive hikes in interest rates to try and cool inflationary pressures.
Inflation in April stood at 8.3 percent, the highest in 40 years, and on Friday the figure for May will be released.
Last week during an interview with CNN, Yellen surprisingly acknowledged that she had been wrong about how inflation was evolving in the US.
“I think I was wrong then about the path that inflation would take,” Yellen told CNN when asked about comments she had made in 2021, when she said that there was only a minor risk of increased inflation.
“There have been unanticipated and large shocks that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly that I … at the time, didn’t fully understand,” she said.
Since then, her admission has been used by Republicans to attack the Biden administration, accusing it of incompetence and not having been able to properly forecast inflation or contain the price rises, an issue that has become the main concern among Americans, according to recent public opinion surveys.
The generalized perception among the US public that the Democrats are not properly managing the price rises or the economy in general threatens to become a major millstone around the neck of the administration and Democratic candidates in the November midterm elections, during which control of both the Senate and House of Representatives could shift to the GOP.