US interest rates may have to rise if economy heats up: Yellen

By Cna10 days ago

WASHINGTON: US interest rates may have to increase somewhat to keep a lid on inflation if President Joe Biden's latest spending proposals are enacted and the economy heats up, Treasury Secretary Janet Yellen said on Tuesday (May 4).

But after her comments set off a mini-firestorm and sent stock prices tumbling, Yellen later clarified that she was not predicting nor suggesting the Federal Reserve should raise rates.

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After winning approval for a US$1.9 trillion pandemic rescue plan in March, Biden has made two more proposals totalling nearly US$4 trillion over a decade and partially paid for with tax increases on corporations and the wealthy.

The goal is to revamp the US economy after the COVID-19 pandemic caused a severe downturn in 2020.

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