U.S. Treasury Secretary Janet Yellen on Wednesday said the Federal Reserve would need luck and skill to maintain a strong labor market while bringing inflation down, or in economists terms to engineer a “soft landing.”
“It has been done in the past. It’s not an impossible combination,” Yellen said, during a talk at the Atlantic Council.
Yellen said she was more worried about the prospects of a recession in Europe given the impact of the war in Ukraine.
In her prepared remarks, Yellen warned countries “sitting on the fence” on Russia not to undermine the sanctions the West has put in place.
“While many countries have taken a unified stand against Russia’s actions and many countries have quickly and voluntarily severed business relationships with Russia, some countries and companies have not,” Yellen said, in remarks prepared for delivery to the Atlantic Council.
“Let me now say a few words to those countries who are currently sitting on the fence, perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others. Such motivations are short-sighted,” she said.
“The unified coalition of sanctioning countries will not be indifferent to actions that undermine the sanctions we’ve put in place,” Yellen said.
The West has put in place unprecedented financial sanctions against Russia and its central bank designed to isolate the country from the international community.
“The Kremlin will be forced to choose between propping up the economy and funding the continuation of Putin’s brutal war,” Yellen said.
She said that she hoped China would use its special relationship with Russia “to help end this war.”
“The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia,” she said.
Yellen said she didn’t think the sanctions placed on Russia would undermine the dollar’s status as the key global currency.
“It will be a long time — if ever — before the dollar is replaced as a key reserve currency in the global economy,” she said.
The Treasury Secretary also announced she will convene a conference next week looking at ways to ease the food shortages that are a spillover of the war in Ukraine.
The heads of the IMF, World Bank, United Nations World Food Program and the World Trade Organization on Wednesday called for urgent actions on food security.
Over 275 million people face acute food insecurity in the world, and many poor populations spend a large share of their income on food, she noted. Countries in the Middle East and Africa have been dependent on imports of Ukrainian and Russian wheat.