Yellen: Don’t “exaggerate the negativism” about the world economy

US Treasury Secretary Janet Yellen said Tuesday that the outlook for the world economy is “reasonably flattering” and refuted the warnings of the International Monetary Fund about the greater risks associated with a worsening of financial tension.

“I would not exaggerate the negativity about the world economy.”Yellen said. “I think the prospects are reasonably auspicious.”.

Yellen said she had seen no evidence to suggest a credit crunch, although it was a possibility, and that she also did not foresee a slowdown in the economy, but that it was also a possibility.

Watchful for downside risks

The Treasury secretary also said she is vigilant about downside risks facing the global economy, given the negative economic consequences of Russia’s war against Ukraine and recent pressures on the banking systems of the United States and other countries.

In remarks prepared for a press conference, Yellen said the global economy is doing better than expected last fall as food and energy prices have stabilized and supply chain pressures they continue to decline.

Capping the price of Russian oil is helping to stabilize global energy markets, while reducing Russia’s main source of income, it added.

Speaking to the media at the start of a week of meetings at the International Monetary Fund and the World Bank, Yellen said the US job market is strong, but inflation is still too high, even though prices have eased in the past six months. .

solid and resistant

The US banking system remains strong, with strong capital and liquidity positions, and the global financial system is resilient thanks to major reforms enacted after the 2008 financial crisis, he said.

The US government last month took emergency measures to restore market confidence following the failures of Silicon Valley Bank and Signature Bank, and then announced more measures to increase oversight of mid-market banks that do not require the approval of a divided Congress.

“Still, we remain vigilant about downside risks,” said Yellen, who said she was in close contact with her foreign peers on banking developments, and hoped to continue those talks this week.

The Treasury had committed to working through global bodies such as the Financial Stability Board and the Basel Committee on Banking Supervision, he said, while also addressing the vulnerabilities of nonbank financial institutions.