Treasury Secretary Janet Yellen testifies during a House Financial Services Committee hearing on the annual report of the Financial Stability Oversight Council at the U.S. Capitol in May. File Photo by Graeme Jennings/UPI | License Photo
Sept. 11 (UPI) -- Treasury Secretary Janet Yellen on Sunday warned that gas prices will increase again in the winter and said the Federal Reserve will "need great skill" to avoid a recession amid economic sanctions targeting Russia amid the war in Ukraine.
Yellen made her comments while appearing on CNN's State of the Union program where she said it is the "top economic priority" of President Joe Biden's administration to bring down inflation.
"The Fed is going to need great skill and also some good luck to achieve what we sometimes call a soft landing, which is bringing inflation down while maintaining the strength of the labor market. And my hope, I believe, there is a path to accomplishing that," Yellen said.
"But Americans know that it's essential to bring inflation down. And over the longer run, we can't have a strong labor market without inflation under control."
Yellen said there is a risk when the Federal Reserve tightens its monetary policy to combat inflation but that officials are monitoring the impacts.
"We're seeing some slowdown in growth, but that's natural because when President Biden took office, the economy was in a deep hole. Output and employment were well short of their normal and potential levels," Yellen said.
She added that the Federal Reserve should use "their own best judgement" as an independent entity that has "great experience" and "proficiency" in how to bring down inflation.
"The labor market is exceptionally strong. The unemployment rate extremely low, there are almost two job vacancies for every worker who's looking for a job. We've had an historically fast recovery of the labor market with around 10 million jobs created since President Biden took office," Yellen said.
"And, of course, we've had shocks that the economy has suffered, supply shocks, the impact of COVID, and, very importantly, Russia's illegal war against Ukraine that have driven up energy costs and food costs."
Yellen noted that the Biden administration has tried to address such rising costs by releasing oil from the Strategic Petroleum Reserve.
Last week, Yellen praised an agreement among Group of Seven countries to finalize a price cap on Russian oil.
Admitting that there's a "risk" for the price of gas to increase in the winter, Yellen said Sunday that Western leaders were working on the price cap to address such concerns.
"This winter, the European Union will cease, for the most part, buying Russian oil. And, in addition, they will ban the provision of services that enable Russia to ship oil by tanker. And it is possible that that could cause a spike in oil prices," Yellen said.
"Our price cap proposal is designed to both lower Russian revenues that they use to support their economy and fight this illegal war, while also maintaining Russian oil supplies that will help to hold down global oil prices."
Data from AAA showed that the national average gas price at the pump was $3.718 on Sunday, down about 7 cents from last week and nearly $1.30 since they reached a record high of $5.016 per gallon in June.