Washington Watch: Fed will need ‘great skill’ and ‘good luck’ to bring down inflation without crashing the economy, Yellen says

by | Sep 11, 2022 | Stock Market

The Federal Reserve has to use its judgment to bring inflation down along with the ever-present risk of a recession, Treasury Secretary Janet Yellen said Sunday. “Of course [a recession] is a concern. The Fed is going to need great skill and also some good luck to achieve what we sometimes call a soft landing, which is bringing inflation down while maintaining the strength of the labor market,” Yellen said in an interview on CNN’s “State of the Union.”

Yellen said there is still a path to accomplishing a soft landing. “We’ve got a good, strong labor market and I believe it is possible to maintain that,” Yellen said. But over the long run, the labor market can’t remain strong without inflation under control, she added. The Biden administration has been supportive of the Fed’s rate hikes this year. Harvard Professor Jason Furman said Biden is a rare president for his support for a deliberate attempt to slow the economy. With Biden on board, criticism of the Fed policy has come from the progressive wing of the Democrats. Sen. Elizabeth Warren, D-Mass., has been a vocal critic, saying Fed interest-rate hikes will put people out of work and close small businesses. “I am very worried the Fed is going to tip this economy into recession,” she said, in an earlier CNN interview. In his key speech in Jackson Hole, Wyo., late l …

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