The White House on Tuesday defended Treasury Secretary Janet Yellen after she said interest rates might eventually have to rise to keep the U.S. economy from overheating amid a massive infusion of federal spending.
“President Biden certainly agrees with his treasury secretary,” press secretary Jen Psaki told reporters at the White House. “Of all people, Secretary Yellen certainly understands the independence and the role of the Federal Reserve and I think she was simply answering a question and conveying how we balance decision-making here.”
Ms. Yellen had said it “may be” that interest rates will have to rise somewhat to make sure the economy doesn’t overheat.
Ms. Psaki said Ms. Yellen also conveyed how the $4 trillion-plus in new spending Mr. Biden is proposing will help the economy.
“Of course officials who don’t work here in the Federal Reserve and other places closely watch what needs to happen — I’m not going to speak on interest rates,” Ms. Psaki said. “But we also take inflationary risk incredibly seriously and our economic experts have conveyed that they think this would be temporary and that the benefits far outweigh the concern.”
The Federal Reserve is expected to keep its benchmark interest rate at or near zero at least through 2023.
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