Powell and Yellen Speak
On Tuesday, US Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell said that higher asset valuations in certain markets aren’t yet cause for concern.
Prices will increase this year as the pandemic subsides and Americans are free to spend again, according to Fed chair Jerome Powell — but he downplayed the possibility that the spending would cause unintended inflation. He said, “We do expect that inflation will move up over the course of this year… Our best view is that the effect on inflation will be neither particularly large nor persistent.” So, while we may see a little inflation, Powell says it’ll only be temporary.
Janet Yellen, the first woman to be US Treasury Secretary, agreed with Powell stating, “I’d say that while asset valuations are elevated by historical metrics, there’s also belief that with vaccinations proceeding at a rapid pace, that the economy will be able to get back on track.”
Yellen also commented on President Joe Biden’s recent $1.9 trillion stimulus package, also known as the American Rescue Plan. Yellen was an advocate of the plan and said as people attempt to reenter the job market after the 2020 crisis, the plan would rapidly deploy funds to millions of Americans unable to pay rent, purchase food, and cover other living expenses.
The economy is predicted to boom in the coming months due to increased COVID-19 vaccines and President Joe Biden’s $1.9 trillion stimulus bill. It’ll be interesting to see if the boom causes long-lasting inflation or if the inflation will only be temporary, like Powell says.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.