Yellen and Powell warn that the delta version is slowing down recovery.
Two of America’s top economic policymakers will warn lawmakers on Tuesday that the delta version of the coronavirus has slowed economic recovery, but will express optimism about the economy’s overall trajectory, according to prepared remarks.
Treasury Secretary Janet L. Yellen and Federal Reserve Chairman, Jerome H. Powell, will testify before the Senate Banking Committee as the US economy is at a crossroads, with businesses facing labor shortages and consumers facing rising prices amid a resurgent pandemic. are doing. In the coming days, the Congress is also grappling with many legislative challenges, which may have an impact on the economy. These include expanding federal funding to avoid US government shutdowns, raising debt limits to prevent defaults on the country’s financial obligations, and passing President Biden’s infrastructure and social safety net packages.
“While our economy continues to expand and recover a substantial portion of the jobs lost during 2020, significant challenges from the delta version stifle the pace of recovery and present substantial barriers to a vibrant economy,” Ms Yellen will say. , according to his prepared remarks. “Still, I am optimistic about the medium-term trajectory of our economy, and I expect that we will return to full employment next year.”
The testimony will give Ms Yellen and Mr Powell a chance to publicly act on lawmakers to raise or suspend the country’s borrowing limits and to warn of disastrous consequences if the United States defaults on its obligations. Ms Yellen cautioned that the debt-limit crunch is undermining confidence in the United States and that a default, which could happen in mid-October, would cause irreparable damage to the economy.
For weeks, Ms Yellen has been quietly pressuring lawmakers to put politics aside and ensure that the United States can continue to meet its financial obligations. She has been in contact with Wall Street chief executives and former Treasury secretaries as she looks to keep markets calm and find allies who can help her in the case of rebellious Republicans who believe Democrats need to be on their own. But the debt limit should be dealt with.
“It is imperative that Congress rapidly address the debt ceiling,” Ms Yellen would say. “The full confidence and credit of the United States will be eroded, and our country may face a financial crisis and an economic downturn.”
Mr. Powell will tell senators that the Fed will continue to support the economy with its monetary policies, which affect how expensive it is to borrow and spend. But he will also clarify that Fed officials will take action if the recent surge in prices continues.
Based on comments released Monday afternoon, Mr. Powell is ready to say, “Inflation has risen and is likely to moderate in the coming months.”
He will cite the lingering coronavirus pandemic as a risk to the economic outlook, according to his prepared statement.
Mr. Powell has also worried about debt limits in recent weeks, saying during a news conference last week that the default is “simply not something we should be considering” and “nobody should believe it”. —that the Fed or anyone else can protect, in the event of a failure in the market or the economy, to fully protect in the event of a failure to ensure that we pay those loans when they become due.”
Ms Yellen and Mr Powell will testify again on Thursday before the House Financial Services Committee.
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