U.S. Treasury Secretary Janet Yellen described the Federal Reserve's recent decision to cut interest rates as a "very positive sign" for the nation's economy. This statement followed the Fed's announcement of a half-percentage-point rate cut, its first since 2020, amid signs of cooling inflation.
Yellen emphasized that the Fed's move reflects confidence in the declining inflation rate, which is moving toward the target of 2%. "The risks associated with inflation have significantly diminished," she noted during an event in Washington. She also highlighted the strength of the job market, stating that the current economic conditions indicate a successful "soft landing"—bringing down inflation while maintaining employment levels.
In a related address, President Joe Biden remarked that the Fed's rate reduction should not be seen as a victory but rather as a sign of progress. Speaking at the Economic Club of Washington, he acknowledged the need for continued efforts in the recovery process.
Their comments came in response to criticism from Republican presidential nominee Donald Trump, who claimed the Fed's decision was indicative of a struggling economy or political motivations. Yellen and Biden both affirmed the Fed's independence, with Biden stating that this autonomy has benefited the nation.
Yellen also defended the Biden administration's recent tariff increases on Chinese goods, including electric vehicles and batteries. She explained that these measures aim to reduce reliance on China by fostering domestic clean energy industries. "We want to develop this as an industry in the United States," she said, while acknowledging that complete self-sufficiency is not the goal.
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