WASHINGTON—Treasury Secretary Janet Yellen played down comments suggesting the Biden administration’s spending plans might prompt the Federal Reserve to lift interest rates, saying “that’s not something I’m predicting or recommending.”
“I don’t think there’s going to be an inflationary problem, but if there is, the Fed can be counted on to address it,” she said Tuesday in an interview at The Wall Street Journal’s CEO Council Summit.
Ms. Yellen suggested earlier Tuesday that the Federal Reserve may have to raise interest rates to keep the economy from overheating if the Biden administration’s spending plans are enacted.
President Biden has proposed roughly $4 trillion of new spending on infrastructure and social programs over the next decade, including funding for roads and bridges, research and development, affordable child care and paid family leave.
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in a prerecorded interview at the Atlantic’s Future Economy Summit.
