US faces 'unacceptable levels of inflation': Treasury secretary

US Treasury Secretary Janet Yellen has told senators the United States faces "unacceptable levels of inflation" and an appropriate budgetary stance is needed to help reduce inflationary pressures without damaging the economy.

Yellen on Tuesday told the Senate Finance Committee that President Joe Biden's proposed spending bill could help lower costs for citizens, including for prescription drugs and clean energy initiatives, Reuters reported.

"We currently face macroeconomic challenges, including unacceptable levels of inflation as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chains, and the effects of supply-side disturbances to oil and food markets resulting from Russia’s war in Ukraine," Yellen said.

Republicans had slammed Yellen for admitting she was "wrong" last year about the path inflation would take. Now she is expected to face tough questions before the Senate panel as prices of certain things reach 40-year highs.

Yellen admitted last week that she had been "wrong" in her oft-repeated assessment that inflation would be “transitory.”

"I think I was wrong then about the path that inflation would take." she told CNN. “As I mentioned there have been unanticipated and large shocks to the economy that have boosted energy and food prices and um, supply bottlenecks that have affected our economy badly.”

The Treasury Secretary has stated that the Federal Reserve is responsible for containing inflation and that she respects the Fed's independence in setting monetary policy.

"To dampen inflationary pressures without undermining the strength of the labor market, an appropriate budgetary stance is needed to complement monetary policy actions by the Federal Reserve," she said.

Inflation in the US hit a 40-year high in March and currently is hovering around 8 percent. In recent weeks, President Biden has signaled a willingness to tweak tariffs on Chinese imports in order to ease inflation.

Economists estimate the move would not have a significant immediate effect on inflation but has the potential to bring about a full percentage point decrease in about a year.

Gas prices in US doubled under Biden administration

The gasoline prices have hit another all-time high in the United States, as President Joe Biden continues his war on American energy, amid the conflict in Ukraine. 

China has argued that tariff reductions would cut costs for American consumers.

President Biden has described combating inflation as his “top domestic priority” and the White House has been searching frantically for remedies.

The Biden administration has taken several steps toward that goal, including by agreeing to tap into the Strategic Petroleum Reserve to generate relief at the pump.

Biden released a 3-point plan to ease inflation last week, but the initiative was met with skepticism even from members of his own Democratic Party. The plan largely calls on Congress and the Federal Reserve to combat inflation.

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