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Capitol Report: Yellen says interest rates may have to rise ‘somewhat’ to keep economy from overheating

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Treasury Secretary Janet Yellen said interest rates may have to increase somewhat in order to keep the U.S. economy from overheating.

In an interview with the Atlantic that was recorded Monday and aired Tuesday, the Treasury chief said, “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy.”

Yellen was discussing the Biden administration’s $2.3 trillion infrastructure proposal and its $1.8 trillion American Families Plan. She acknowledged that those proposals have “high price tags,” but stressed that they are long-term programs.

Yellen made similar comments on Sunday, in which she argued that the proposals won’t fuel inflation because they will be phased in gradually.

U.S. stocks
DJIA,
-0.43%

SPX,
-1.18%

COMP,
-2.58%

deepened their losses in the wake of the interest-rate comments by Yellen, a former head of the Federal Reserve.

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