Image source: CNBC Video Screenshot
Following is the informal records of a CNBC unique interview with United States Treasury Secretary Janet Yellen on CNBCs “Closing Bell” (M-F, 3PM-5PM ET) today, Monday, November 22nd. Following are links to video on CNBC.com:
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Treasury Secretary Yellen Sees An Economy On A Strong Growth Spurt
Joining us specifically for her very first response to the news is Treasury Secretary Janet Yellen, who of course served herself as Fed Chair from 2014 to 2018. I had the enjoyment of working extremely carefully with both Jay Powell and Lael Brainard and they are practiced experts, support an independent Fed, are completely committed to the Feds dual mandate of maximum work and price stability and have generated significant records. EISEN: It does seem that Fed Chair Powell will have no issue getting confirmed. EISEN: Yeah, that could be a slippery slope going forward if the Fed gets more included in, in climate. YELLEN: Well, Im not going to weigh in on the information of Fed policy.
SARA EISEN: Lets get straight to the big news of the day. President Bidens choice to renominate Jerome Powell for a 2nd term as Federal Reserve Chair. Joining us solely for her first reaction to the news is Treasury Secretary Janet Yellen, who naturally served herself as Fed Chair from 2014 to 2018. Its fantastic to see you Treasury Secretary Yellen, thank you for joining us.
TREASURY SECRETARY JANET YELLEN: Thanks for having me.
EISEN: So, the president followed your suggestions. What did you suggest to him on this front?
YELLEN: Well look, I do not wish to say what I recommended, however I undoubtedly will say that Im extremely happy with his option. I had the enjoyment of working really carefully with both Jay Powell and Lael Brainard and they are consummate specialists, support an independent Fed, are totally devoted to the Feds dual mandate of maximum work and rate stability and have actually generated remarkable records. I believe in them, and I think theyll have broad support among Congress and the public and can be relied on to do an excellent job.
EISEN: It does appear that Fed Chair Powell will have no problem getting confirmed. Hes got bipartisan support, however we did hear from Senator Elizabeth Warren who had called him, “a harmful male.” Shes going to vote versus him and she pointed out failures on regulation, climate and principles. Why is she incorrect?
YELLEN: Well look, on regulation you have the Chair Powell, Powell has the endorsement of Barney Frank and Chris Dodd, the authors of Dodd-Frank. Hes clearly somebody who abides by the core reforms that were put in location and has been encouraging of them and they have actually essentially said that they see that and feel hes the very best person to lead the Fed and I concur. I concur with that choice. We will be choosing a vice chair for guidance and Dodd-Frank provides that individual a substantial obligation in guidance. Chair Powell has said hell be encouraging of letting that person take the lead.
EISEN: When–.
YELLEN: On environment–.
EISEN: We heard the announcement. Oh, proceed. Sorry didnt mean to cut you off.
YELLEN: On climate, the Fed has made considerable strides on bringing an appraisal of how climate risks impact the banks and monitors. Its doing great work on that and is getting ready I think to do scenario analysis of the threats facing the banks and he utilized it in supervision.
EISEN: Yeah, that could be a slippery slope going forward if the Fed gets more associated with, in climate. Secretary Yellen, I did wish to ask you obviously about inflation because we heard that from President Biden today in the statement, from Lael Brainard, from Jay Powell. Is the administration getting more concerned at this moment about inflation?
YELLEN: Well, I think we do have actually to be concerned about inflation. Its reached the level that worries most Americans who are seeing it in their pocketbook when they go to the shop to buy food or to fill up their automobiles at the pump. I think its partially a reflection of the fact that pandemic has actually had a serious impact in our economy, and its part of demand supply imbalance and getting on track but the administration, the White House is doing everything we can to address supply chain traffic jams that are increasing costs and over the longer run, the Fed requires to play an essential function to make certain that this does not end up being endemic. And I know they can be relied on to do that.
EISEN: Should the Fed, should Powell continue to focus on the enhancement in jobs? Theyre still more than 4 million loss since the pandemic over inflation since thats been the policy up until now, but many are calling for it to alter.
YELLEN: Well, Im not going to weigh in on the information of Fed policy. The Feds required includes steady and low inflation over the longer term and likewise maximum work. They put in place a new framework for how to manage the balancing of these 2 mandates and in-depth questions of methods and timing. I think we can leave to the Fed. I believe in their capability to make good judgments there.
EISEN: Okay, so Ill ask you a financial outlook concern then. If the Fed does get a little more, if the Fed acts quicker to taper, pare back its stimulus and acts quicker to raise rates of interest, does that threat an economic crisis or choking off the development?
YELLEN: Well, I see the United States economy being on a strong development spurt at the minute. Unemployment has actually been falling fast. Weve seen over 500,000 jobs a month because President Biden was elected and I believe thats going to continue into next year driving down joblessness. You understand, theres strong support for financial development thats coming from policy and from the buffer stock of cost savings families have constructed up so its up to the Fed to decide simply how much monetary policy support is necessary, provided those other aspects.
EISEN: The dollar, today, Secretary Yellen, is trading at the greatest level because July 2020. Does that convenience you a little in terms of taming inflation or do you fret about the impact thats going to have on growth like exports and corporate earnings?
YELLEN: Well, as I said, I think development is poised to be extremely strong over the coming year and unemployment to decline. I think what we do see in the marketplace with the strong dollar in generally low, longer term interest rates is confidence that inflation is not something that is going to become long enduring or endemic in the US economy and thats essential.
EISEN: We talked a bit about environment modification, and it is something that President Biden pointed out in his pick, and you mentioned that the Fed is going to pay a little closer attention to it though it could be a bit questionable if the Fed enters into this, politicization of the Fed, confusion of the required. What should the Federal Reserves function remain in battling environment change?
YELLEN: Well, you called Chair of FSOC, I call together all of the regulators, the banking and other financial regulators to go over the significance of taking environment modification into account in supervision and policy of monetary organizations. Environment modification postures a significant danger to banks and to the monetary stability of our economy and in the security and strength supervision that it does, simply as the Fed analyzes through its regular tension tests to make sure that banks have adequate capital and appropriate danger management to deal with threats originating from monetary market risks. Climate modification requires to be contributed to that mix and thats precisely what the Fed is doing is gearing up to do that sort of analysis so that it can make certain that banks understand those risks and handle them effectively and efficiently.
EISEN: We understand you have a very busy agenda today so thank you so much for making the effort to speak with us on this historic day. Treasury Secretary Janet Yellen, thank you.
Updated on Nov 22, 2021, 4:13 pm.
