U.S. Treasury Secretary Janet Yellen sought Wednesday to project confidence in the U.S. financial outlook while pledging vigilance in responding to “risks on the horizon.”
She is offering that message as global finance leaders gather in Washington to discuss the increasingly dismal view of the global economy.
“Our economy remains resilient in the face of global economic headwinds,” Ms. Yellen said in remarks prepared for delivery at a meeting on the sidelines of this week’s annual meetings of the International Monetary Fund (IMF) and its sister-lending agency, the World Bank.
Her remarks to the Bretton Woods Committee’s International Council crediting President Joe Biden’s domestic policies for contributing to U.S. economic strength came as administration officials try to talk up the president’s policies ahead of midterm elections. Those elections will decide the balance of power in Congress and statehouses across the nation. Democrats – with no margin for error – are fighting to retain control of the House and Senate.
Russia’s invasion of Ukraine has driven up food and energy prices globally – in some places exponentially, exposing vulnerabilities in the global food and energy supply. The ongoing COVID-19 pandemic, rising inflation and worsening climate conditions are also affecting world economies and exacerbating other crises, like high debt levels held by lower-income countries.
These risks prompted the IMF to lower projections for global economic growth in 2023, with world economic growth expected to be lower by $4-trillion through 2026.
The bleak projections come as central banks around the world raise interest rates in hopes of taming rising inflation. The U.S. Federal Reserve has been the most aggressive in using interest-rate hikes as an inflation-cooling tool.
Vitor Gaspar, director of the IMF’s Fiscal Affairs Department said Wednesday that world leaders need to “be prepared for a shock-prone world.”
Ms. Yellen, a former U.S. Federal Reserve chair, said the Biden administration is “committed to working with our partners to build greater resilience, in America and globally, to the types of shocks we’ve seen.”
“We are highly attuned to the risks on the horizon,” Ms. Yellen said. “Many other major economies are facing high inflation as well. They must also continue implementing policies to rein that in.”
“Our path forward begins with the jobs we have to do at home,” she said.