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Yellen says 'no plan' to step down as Treasury Secretary, sees 'possible' soft landing for US economy

Treasury Secretary Janet Yellen said Wednesday she has "no plan" to step down from her post amid continued chatter about the former Fed chair's role in the Biden administration.

Speaking at the New York Times' Dealbook Summit in New York City, Yellen said, "I have committed to staying [as Treasury Secretary]. I have no plan to leave."

Yellen's comments come after a fall full of speculation on whether a change would be coming at the top of the Treasury Department following the midterm elections. Yellen herself went so far as to deny reports of her impending departure back in October.

Elsewhere in a wide-ranging conversation with the New York Times' Andrew Ross Sorkin, Yellen said the U.S. economy will likely be able to achieve a so-called "soft landing," in which inflation slows without tipping the economy into a sharp recession.

“I believe there is a path by which a soft landing could happen,” Yellen said. “I believe there are risks to that path, but I believe it is certainly possible for us to have a soft landing.”

Fears have grown over a "hard landing" for the U.S. economy, wherein a sharp recession would follow the aggressive rate hikes seen by the Federal Reserve this year.

The central bank has raised its benchmark interest rate by a combined 3.25% so far this year, with another 0.50% increase expected next month. Yellen served as chair of Federal Reserve from 2014-2018 under Presidents Obama and Trump.

U.S. secretary of the treasury Janet L. Yellen attends the DealBook Summit in New York City, U.S., November 30, 2022. REUTERS/David 'Dee' Delgado
U.S. secretary of the treasury Janet L. Yellen attends the DealBook Summit in New York City, U.S., November 30, 2022. REUTERS/David 'Dee' Delgado

Other economic concerns Yellen addressed were were protests in China over zero-COVID protocols and the looming threat of a railroad strike in the U.S.

Yellen deemed lockdowns in China a threat to progress made on alleviating global supply chain imbalances that have, “contributed very importantly to inflation.”

“We have seen inventories build, shipping costs have come down, and delivery lags have come down, so the global and U.S. economy are healing, and the COVID lockdowns we’ve seen have disrupted production,” Yellen said.

Meanwhile, Yellen also emphasized a railroad strike would be a “major setback” to the U.S. economy, saying the Biden Administration was taking measures to ensure one is avoided.

Elsewhere in the conversation, the Treasury Secretary called the Labor Department’s monthly employment report the most important data point officials monitor, along with inflation numbers. The November jobs report is due out Friday morning.

“We don’t want to overshoot full employment, and we do have an inflation problem,” Yellen said. “So you can expect growth to slow, and it has slowed — we continue to grow and have positive growth, but it slowed substantially.”

“What you’re seeing is some writing down of future growth that is inducing firms to rethink people they really need to hire, so we’ve seen the beginnings of job openings [starting to] fall off a little bit," Yellen added. These comments came about an hour before the latest data on job openings was released from the BLS, which showed there were some 10.3 million jobs available in the U.S. as of October, down from 10.7 million the prior month but still significantly above pre-pandemic records.

Yellen also called layoffs seen across technology companies an exception, citing “special factors” facing the sector, including a slowing economy, and declining ad revenue.

Yellen also spoke ahead of a much-anticipated appearance from Sam Bankman-Fried, founder and former CEO of the fallen cryptocurrency exchange FTX. Yellen pointed to the firm's collapse as reason for the need to regulate the industry, while stating financial innovation is important and can offer benefits like easier overseas transactions, if utilized responsibly.

“To the extent the crypto world could deliver faster, cheaper, safer transactions, we should be open to financial innovation,” Yellen said.

“That said, that’s not what most of it has been about, and I strongly continue to believe — and [what] everything we’ve lived through in the last couple of weeks and earlier as well [says] — this is an industry that really needs to have adequate regulation, and it doesn’t.”

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