U.S. Treasury Secretary Yellen: Chip supply shortages have pushed up inflation

On Tuesday, June 7, U.S. Treasury Secretary Janet Yellen attended a hearing of the U.S. Senate Banking Committee, and will go to the House Ways and Means Committee on Wednesday to discuss the Biden administration's annual budget request.

She will also face questioning from lawmakers about rising prices as the current annual U.S. inflation rate has exceeded 8%, hitting a four-decade high. The Biden administration has repeatedly stated that fighting inflation is its top economic priority.

In written materials submitted before the hearing, Yellen said:

"To contain inflationary pressures without weakening the labor market, an appropriate budget stance is needed to complement the Fed's monetary policy actions."
"We recommend making smart, responsible fiscal investments - reducing deficits and keeping the debt burden on the economy low."
"The budget's investments have been fully rewarded through tax code reform that requires businesses and the wealthiest Americans to pay their fair share, closes loopholes, and improves tax administration."
"I hope Congress will also make implementation of a global minimum tax part of its legislative agenda.

She also said that Biden's 2023 budget plan will reduce the US debt burden and reduce the fiscal deficit.

News in early U.S. stock trading said that Yellen reiterated the important role of the Federal Reserve in combating high inflation and that "lowering inflation should be our (U.S. government) priority."

She specifically mentioned that the chip supply shortage has pushed up inflation. One-third of inflation is caused by the new and used car markets, which are also affected by chip problems.

Last week, US President Biden and Treasury Secretary Yellen met with Federal Reserve Chairman Powell at the White House to discuss inflation and economic countermeasures. Yellen once admitted that her view that "inflation is only temporary" was a misjudgment.

One and a half hours after the U.S. stock market opened, the three major stock indexes all stopped falling and turned to rise. Technology stocks Apple rose 1.3%, and Tesla maintained a 0.4% decline. The Nasdaq Biotechnology Index rose more than 1.3%. The decline in U.S. Treasury yields widened, with the 10-year U.S. Treasury yield falling to 2.97%.