US Treasury Secretary Janet Yellen on an unannounced visit to Ukraine on Monday, February 27, 2023. Credit: CNN
Minneapolis (CNN) --
US Treasury Secretary Janet Yellen said Monday she believes US inflation remains too high, but a "soft landing" is on the radar.
During an exclusive interview with CNN's Melissa Bell from Kyiv, Yellen said the Federal Reserve's efforts to date to reduce inflation while maintaining a strong labor market appear achievable.
"I would say, 'So far so good,'" said Yellen, a former Fed chair who led the central bank from 2014 to 2018.
Yellen warns of a "global financial crisis" if there is no deal to increase US debt.
"Obviously there are risks, and the global situation we are facing is very uncertain," he said.
"There may be shocks from it. But look, inflation is still too high, but in general, if you look at the last year, inflation has been coming down. And I know that the Fed is committed to continuing the process of bringing it down to levels more normal, and I think they will succeed with it.
Yellen was in Kyiv on an unannounced visit Monday for a series of meetings and engagements, including with Ukrainian President Volodymyr Zelensky to reaffirm US support for Ukraine and announce the recent transfer of $1.25 billion in economic and budgetary aid.
advertising
In her interview with Bell, Yellen touched on internal issues such as inflation and a debt ceiling breach, as well as the effectiveness of sanctions against Russia's economy.
Yellen said the "extraordinary measures" taken by the Treasury Department to delay defaulting on the debt ceiling will help pay government bills until at least early June.
Why are consumer prices still high in the United States even though inflation is down?
He said it would be "inconceivable" for the United States, "whose currency, the dollar, serves as the world's reserve currency; a country with the deepest and most liquid financial markets where Treasuries are the ultimate safe asset" and "with a credit rating that the United States has always had," defaulted on its obligations.
"It is absolutely essential to preserve that to avoid an economic and financial catastrophe," he told CNN.
The only solution to that issue, Yellen said, is for Congress to "fulfill its responsibility," as it has done in recent history, to raise the debt ceiling to pay already authorized spending.
"Congress has to stand up and say it is committed to the government paying the outstanding bills," he said.
As for Russia's economy, which has not suffered from sanctions by the United States and other Western countries, Yellen said she expects it to weaken as the country loses foreign investment and depletes its reserves and reserve funds.
"Over time, Russia's economic trajectory will be increasingly affected," he said.
"And their ability to replenish military equipment that has been destroyed in their attacks on Ukraine has been severely compromised."
Still, recent US intelligence has shown that China is considering increasing its support for the Russian economy and war efforts, including the supply of drones and munitions.
Such a move would carry "serious" consequences, Yellen said.
What is the US debt ceiling and why is the threat of default so worrying?
What you should know
"We have been extremely clear that we will not tolerate systematic violations by any country of the sanctions we have put in place that are intended to deprive Russia of access to military equipment to wage this war," he said.
"And we have been very clear with the Chinese government and we have made it clear to Chinese companies and financial institutions that the consequences of violating those sanctions would be very severe."
US Inflation Janet Yellen