US Economy Not To Get 'Too Hot' During Recovery From Pandemic - Yellen

The US economy is unlikely to overheat during its recovery from the coronavirus pandemic and there are adequate tools to moderate its growth, Treasury Secretary Janet Yellen said in an interview on Monday

WASHINGTON (UrduPoint News / Sputnik - 08th March, 2021) The US economy is unlikely to overheat during its recovery from the coronavirus pandemic and there are adequate tools to moderate its growth, Treasury Secretary Janet Yellen said in an interview on Monday.

"Well, I really don't think that that's going to happen," Yellen told MSNBC when asked about the possibility of the economy getting "too hot" in an environment of spiking inflation and interest rates. "We don't expect undesirable levels of inflation."

US bond yields, benchmarked by the ten-year Treasury note hit pre-pandemic highs over the past month, pushing up the Dollar as well. While the Federal Reserve itself has kept US interest rates at near zero since the coronavirus outbreak a year ago, the spike in yields has prompted investors to bet on the possibility of runaway inflation from a V-shaped economic recovery that characterizes quick and sustained rebound after a sharp decline.

Yellen said the economy was instead experiencing a K-shaped recovery, where one segment began rebounding from the lockdowns-caused recession, while another continued declining.

"We have a K-shaped recovery happening now," she said. "The K-shaped recovery existed before COVID, but now it's worse."

Yellen disputed the notion that President Joe Biden's $1.9 trillion COVID-19 relief bill, which passed the US Senate on Saturday and due to become law after some amendments by the House of Representatives, was too large for the economy to absorb without some overheating.

"This is the package we need to revive our economy to where it was before the pandemic," she said. "If it turns out to be inflationary, there are tools to deal with that and we'll monitor that closely."