Yellen to CNN: The United States can reduce inflation while maintaining a strong labor market

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(CNN) Last month’s disturbances within The banking sector America was not pushed off course by an investigation Soft landingTreasury Secretary Janet Yellen told CNN correspondent Fareed Zakaria in an exclusive interview on Friday.

“I think there is a way to bring down inflation while preserving what I think we will all look at as a strong job market,” Yellen said. “And the evidence that I see is that we are on that path.”

She added, “Are there risks? Of course. I don’t want to downplay the risks here, but I think it is possible.”

Yellen cited that the factors driving inflation higher go far beyond the malaise seen in the Fed The labor market in the United StatesIn particular Russia’s war in Ukraineresulting in higher food and energy prices; And Supply chain disruption in the era of a pandemics, which caused shortages of key materials which gave rise to important parts of the economy, Like the auto industry.

“We’re seeing the supply chain bottlenecks that have fueled inflation, and we’re starting to sort them out,” she said. “We’ve had major shifts in the way people live and lower interest rates, and housing prices have gone up dramatically. Now, housing prices have basically leveled off.”

For Fareed Zakaria’s exclusive interview with Treasury Secretary Janet Yellen, watch Fareed Zakaria GPS this Sunday at 10am EST/PT.

Yellen said she is seeing some easing of tension in the labor market, including increased unemployment claims, decreased job opportunities, and increased participation in the workforce. She said that gaining more slack in the labor market will help bring down inflation, but that does not mean there is a need for a big jump in unemployment.

“I think a strong labor market and lower inflation are compatible goals,” she said.

US economic data released last week showed Persistent signs of cooling In areas such as inflation and consumer spending.

Last month , Silicon Valley bank collapse And signature bank It caused a crisis in the banking sector in the United States, turbulent financial markets and fueled uncertainty about the potential for negative effects to spread throughout the broader economy.

The Treasury, jointly with the Federal Reserve and the Federal Deposit Insurance Corporation, Intervened After the failure of regional banks to ensure that bank customers have access to all their funds and to prevent future bank runs.

Yellen told Zakaria that actions by the Treasury Department, the Federal Reserve Bank and the Federal Deposit Insurance Corporation “have brought a halt to the systemic threat that exists.”

“Americans should note that America has a strong and secure banking system,” she said. “Our banking system is well-liquid and well-capitalized, the problems two banks had – that’s not a general problem across the banking system. We’ve taken steps to make sure depositors feel their savings are safe, and the tools we used to do that are the ones we can use again if Difficulties in one or two of the banks were creating a risk of contagion in the system.”

Banks are likely to be “somewhat more cautious” in their operations and, as a result, could rein in the availability of credit. Federal Reserve officials noted that credit tightening could help efforts to calm inflation.

However, the bank failures have fueled uncertainty about the potential for more bank failures, as well as potential aftershocks that could push the US economy into recession during The Fed is nearing the end of the tail For a historic campaign to raise prices to reduce inflation.

Yellen said that is not the case currently.

“I don’t see anything at this time that is dramatic or significant enough from my perspective to change the outlook significantly,” Yellen said. “I think the outlook remains the same for moderate growth and a continued strong labor market with low inflation.”

Yellen’s interview with Zakaria came near the end of a busy week of meetings, public appearances, and speeches for the Treasury Secretary in conjunction with Spring meetings of the International Monetary Fund and the World Bankwhere Ukraine was the main focus.

In an interview with Zakaria, Yellen said that Russia has to pay for the damage done to Ukraine and that talks are under way on possible mechanisms to achieve this.

“This is a responsibility that I think the international community expects Russia to take on,” she said. “This is something we are discussing with our partners, but there are legal restrictions on what we can do with frozen Russian assets.”