Data released on Wednesday showed that US consumer inflation rose to 9.1%, the highest level since 1981. “We support first and foremost the Fed’s efforts; what they deem necessary to bring inflation under control,” he told a news conference in Bali ahead of a meeting of Group of 20 finance ministers. “Beyond that, we’re taking our own steps that we think will be supportive in the near term to reduce inflation — particularly what we’re doing on energy prices and the Strategic Petroleum Reserve.” “And also the work we are doing to establish the price ceiling for Russian oil and avoid possible future increases in oil prices,” he added. Nearly half of the price increase in the latest inflation numbers came from high energy costs, Yellen added.
Read more about energy from CNBC Pro
Asked whether reducing inflation is more important than the risk of a recession caused by higher interest rates and slowing growth, Yellen said she believed it was appropriate to make the top priority of reducing inflation as the labor market “currently She is very strong”. Yellen said, however, that the rate hike could have a knock-on effect on other economies. A strong US dollar would make other currencies comparatively weaker, but it could also make their exports cheaper and more attractive. “On the one hand, it can enhance their ability to export, which is good for their development. On the other hand, to the extent that countries have dollar-denominated debt, it can make these debt problems — which are already very serious — more difficult,” he said.
