Yellen "Temporary Inflation Rise Until Year-End"... $6 Trillion Budget Proposal Expected Announcement

No Inflation Increase Due to Large-Scale Government Investment Emphasized
Next Year's Budget Plan to Realize Big Government Announced in a Day
NYT Expects $6 Trillion Scale

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Janet Yellen, U.S. Secretary of the Treasury, predicted that the recent rise in inflation is temporary and will decline after the end of the year. She stated that the Biden administration's infrastructure investment will not fuel inflation and urged Congress to pass a large-scale spending bill.

On the 27th (local time), Secretary Yellen appeared at the House Appropriations Subcommittee hearing and said, "The current judgment is that the recent inflation we have seen is temporary and not chronic."

She added, "I expect this to continue for a few more months and that we will see high annual inflation rates until the end of the year."

Secretary Yellen identified the rise in inflation as being caused by the COVID-19 pandemic, supply chain bottlenecks, and price fluctuations due to changes in consumer spending.

She also mentioned that the White House, Congress, and the Treasury Department are closely monitoring inflation and have the tools to make adjustments if necessary.

Secretary Yellen denied Republican lawmakers' claims that the Biden administration's large-scale infrastructure investment plan would stimulate inflation, reiterating the position that government spending should lead economic recovery.

Earlier this month, Secretary Yellen sparked significant controversy by stating that interest rates might need to be raised somewhat to prevent the economy from overheating.

Recently, major U.S. inflation indicators have been warning of expanding inflation. The April Consumer Price Index (CPI) surged 4.2% on an annual basis, reaching the highest level in 13 years. The Personal Consumption Expenditures (PCE) index for March, scheduled to be released the following day, is expected to show a significant increase compared to the forecasted 2.9%, which is anticipated to further heighten inflation concerns.

Biden Administration Expected to Announce $6 Trillion Budget Tomorrow

Secretary Yellen's remarks came a day before the Biden administration's first budget announcement. The New York Times predicted that the Biden administration would unveil a $6 trillion budget, the largest since World War II.

According to documents obtained by the Times, U.S. federal spending is planned to increase to $8.2 trillion by the 2031 fiscal year. This would result in an annual deficit of $1.3 trillion over the next decade.

The Times reported that the Biden administration estimates inflation will not exceed 2.3% over the next ten years.

The Times evaluated that President Biden's ambition to pursue a large government, support the middle class, and strengthen U.S. industrial competitiveness was evident.

Meanwhile, Republican senators unveiled an infrastructure investment bill worth $928 billion (approximately 1,000 trillion won) on the same day. Although the Biden administration recently reduced its social infrastructure investment plan from $2.25 trillion to about $1.7 trillion, the difference between the two sides' plans amounts to approximately $770 billion, leading to widespread expectations that reaching an agreement will be difficult.

This content was produced with the assistance of AI translation services.