“We are doing everything we can to avoid further increases in energy prices…but we also want to make sure” that Europe wean itself off its dependence on Russian oil and gas, Yellen said. “It is unlikely that these pressures will abate in the near future,” she added.
Yellen stressed that she does not expect the US economy to enter a recession, arguing that it is in a good position to face economic risks, noting the rapid growth resulting from the recession of the Corona virus. But she said Europe is likely more “vulnerable,” citing its dependence on Russian energy more than that of the United States.
“This is an environment full of risks, both in terms of inflation and a potential slowdown,” Yellen said.
Yellen’s comments come in the name of Gas cost over $4 per gallon In every state in America for the first time. Nationally, the average price for a gallon of gas was $4.52, with costs much higher in some states, such as California. Soaring energy prices come on top of the US economy, which is already suffering from the highest inflation in nearly four decades, and this summer could drive gas prices even higher as demand increases as consumers get in the way.
Yellen and the finance ministers of the Group of Seven Western industrialized nations meet this week in Germany to discuss global economic challenges, as well as possible measures to deepen sanctions against Russia over its invasion of Ukraine. Officials face an unusual set of challenges, trying to balance pressure to punish Russia with renewed fears of a global slowdown and soaring inflation around the world.
Yellen said the sanctions are designed to inflict maximum pain Russia, while easing its impact on the rest of the global economy. She said US officials have always realized that it would be impossible to completely isolate other countries from the impact of the war.
“That’s the gist of the conversations we’ve always had,” Yellen said.
One of the most worrisome issues is energy prices, as gas costs have skyrocketed since Russia’s invasion of Ukraine in February, disrupting international markets. The Europeans have discussed additional measures to deprive Russia of its revenue from oil and gas sales – the US has already banned energy imports from Russia – but any such move could push prices further up. Yellen told reporters on Tuesday that US and European officials will discuss measures such as capping the price of Russian energy purchases this week, but no decisions have been made.
The Biden administration has taken several steps aimed at lowering gas prices, such as releasing a huge share of the country’s oil reserves and putting pressure on oil companies to increase production. The White House has also considered measures such as a reduction for motorists and a federal gas tax credit, but has not endorsed them.
Bob McNally, president of Rapidan Energy Group, an energy consultancy, said consumer prices could approach $5 a gallon this summer and that prices will continue to rise as long as consumption continues to rise, and “so far, there is little evidence On the importance of requesting a reduction in expenditures.
“Consumer prices for both gasoline and diesel have risen to record highs in the United States and are showing no signs of abating,” McNally said. “While not every recession has been caused by high oil prices, high oil prices have always caused or contributed to a recession.”
Yellen also said the United States is likely to end a sanctions exemption allowing Russia to make interest payments on its debt, which could raise the odds of a Russian default that could spread to international markets.
She also noted her efforts to obtain international assistance to alleviate the new challenges of hunger raised by the war. Yellen directed the international financial institutions to come up with a plan to address severe food shortages.
“This has been an important progress, but we need to redouble our efforts to make sure that people around the world can feed their families,” Yellen said.
“Unapologetic tv specialist. Hardcore zombie trailblazer. Infuriatingly humble problem solver.”