Yellen: Cuts in Debt Bill, Decline in ‘Deficit Fiscal Stimulus’ Help Fed Reduce Inflation

On Wednesday’s broadcast of CNBC’s “Squawk Box,” Treasury Secretary Janet Yellen said that the spending cuts and deficit reduction in the debt limit bill and the fact that “the deficit fiscal stimulus has declined” since the end of the coronavirus pandemic are “supporting the Fed’s efforts to bring inflation down.”

Yellen stated, “Well, look, this bipartisan agreement just cut the deficit by a trillion dollars. And the deficit fiscal stimulus has declined certainly since the pandemic ended, so that is supporting the Fed’s efforts to bring inflation down. I don’t think there’s a trade-off between investing in America and doing spending that will improve the trajectory for our economy and job prospects. There’s not a conflict between that and running a responsible fiscal policy. President Biden offered a budget that has significant further investments in our economy while lowering deficits over ten years by $3 trillion. But revenue needs to be part of that discussion. It’s not all a matter of spending. I think we, in the interest of tax fairness and having the resources to invest in our economy, we also need to be considering proposals that would enhance revenue while also controlling spending.”

Follow Ian Hanchett on Twitter @IanHanchett