Janet Yellen Says Higher Interest Rates May Persist in US

(Bloomberg) — Treasury Secretary Janet Yellen said higher interest rates may persist, while insisting the US economy is “in a good place.”

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The interest on US debt, which stands at 98% of economic output, “remains manageable,” Yellen said on Monday in an interview with Sky News. “Higher interest rates may persist although that’s not clear,” she said. “Our fiscal situation is by no means unsolvable. We have to be attentive to it.”

The Treasury secretary also said the US can “absolutely” afford to provide fresh aid to Israel as it battles with Hamas militants while continuing to offer significant assistance to Ukraine.

“Americans can certainly afford to stand with Israel and to support Israel’s military needs,” she said. “And we also can and must support Ukraine in its struggle against Russia.”

As the Israeli military prepares to invade Gaza to hunt down Hamas forces, Yellen said it’s too early to predict whether the conflict could tip the global economy into recession.

“We’re looking at the economic implications of the hostilities here,” she said. “I think it’s too early to speculate on whether or not there will be significant consequences. I think importantly, it depends on whether the hostilities extend beyond Israel and Gaza, and that’s certainly an outcome we would like to avoid.”

Yellen spoke in Luxembourg where she’s preparing to meet with EU officials to discuss aid to Ukraine and economic policy toward China.

(Updates with additional Yellen comments from fourth paragraph.)

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