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CNBC Exclusive: CNBC Transcript: United States Treasury Secretary Janet Yellen Speaks with CNBC’s “Closing Bell” Today

WHEN: Today, Thursday, January 20, 2022  

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC exclusive interview with United States Treasury Secretary Janet Yellen on CNBC's "Closing Bell" (M-F, 3PM-5PM ET) today, Thursday, January 20th. Following are links to video on and

All references must be sourced to CNBC.

SARA EISEN: Joining us now for an exclusive interview is Treasury Secretary Janet Yellen. Secretary Yellen, welcome back. It's nice to have you.

SECRETARY JANET YELLEN: Thanks so much, Sara. It's nice to be with you.

EISEN: So, there's the setup. We are coming off of a very strong year of economic growth, millions of jobs created. I know you're happy with that. But there is this question of inflation and what the environment is going to look like. We just had another ugly close on Wall Street. Do you still expect inflation to moderate to normal 2% levels this year?

YELLEN: Well, I expect inflation throughout much of the year 12-month changes to remain above 2%. But if we're successful in controlling the pandemic, I expect inflation to diminish over the course of the year and hopefully to revert to normal levels by the end of the year, around 2%. There is a lot of uncertainty. We're doing all the things that we can to deal with supply chain issues that are pushing prices up. Of course, you know, the Federal Reserve has an important role here. We strongly support an independent Federal Reserve. We have nominees to the Fed that we think will do a good job in helping the Fed they're committed to achieving their dual mandate of full employment and price stability. And you know, for our part, there are things that we can do and are trying to do to boost labor's supply to make sure state and local governments have the resources they need to deal with the pandemic, to keep schools open, things that will make it safe feel, feel safe for people to go back to work and of course, the ports and we've tried to take steps to facilitate, for example, the number of people who have licenses to engage in trucking, but the Fed has an important role to play here as well.

EISEN: No question about it and that's what's causing some of the consternation I think on Wall Street. What is your expectation for the economy this year? If the Fed does raise interest rates four times, maybe even more to control inflation, how likely is it that we can hang on to this recovery?

YELLEN: Well, look, you know, I'm not gonna comment on what the Fed should do. They have a dual mandate, which is to keep the labor market strong and to make sure the economy continues to grow while bringing inflation down and I have confidence in their ability to make appropriate judgments about what that takes. But, you know, a year ago if you go back to the challenges that we were facing and the Federal Reserve was facing, unemployment was extremely high. We were all worried that we would be facing a situation like we had after 2008 when it took almost a decade to get back to full employment and our decisions with Congress about the American Recovery Plan reflected our desire to make sure we didn't repeat that, to make sure households, businesses, state and local governments would have the resources they needed to get the economy back to normal again and the Fed played a role with an expansionary monetary policy. And I think it has to be viewed as a remarkable success that the unemployment rate has fallen the most in any year in American history. We had over 6 million jobs created. We've got a good strong labor market. And I think if we can deal with the pandemic so that people feel confident in going back to life closer to the way it was pre-pandemic and come back into the labor market, some of the supply pressures will ease and inflation will revert and the Fed, the Fed needs to recalibrate monetary policy to facilitate those adjustments.

WILFRED FROST: Secretary Yellen, I wanted to ask about Russia and Ukraine, if I may. Well, we heard yesterday from the President how some form of action from Russia into Ukraine could could well be imminent. And I just wondered how ready you were, how ready treasury was to impose financial and economic sanctions on Russia if called upon by the President? Does it take you a matter of hours to impose them or a matter of weeks and, and how crippling might they be for the Russian economy?

YELLEN: Well, we have been preparing and the President has said that he would impose severe consequences on Russia if it invades Ukraine, and we've worked with our allies and are prepared to impose strong, strong measures that Russia will feel, we hope that Russia will look for a diplomatic solution, but we're prepared to impose significant consequences.

FROST: There was a story this week that when the UK delivered weapons to Ukraine, they flew them via a long route over the Baltic Sea, over Poland to the Ukraine rather than having to bother to seek clearance over German airspace. And I just wanted you mentioned you've spoken to our allies if there's a difference in opinion amongst your, say the UK and German allies on how strong those sanctions are on Russia should be?

YELLEN: Well, we want to stay united with our allies and the economic ties, of course between Russia and Europe are stronger than they are between Russia and the United States. So, we're working very closely with them to understand their concerns and make sure that we take them into account in designing, in designing our responses.

EISEN: Secretary Yellen, beyond the, the topic of Russia, the President was asked about Build Back Better. I know it's something that you have been pushing for. It sounds like the Administration now expects this to pass in some sort of piecemeal form instead of the whole package. And I'm curious what your priorities would be in terms of getting pieces of it passed in order to boost the economy and fight inflation.

YELLEN: You know, I see that package really as addressing longer term challenges facing the US economy. It's a supply-oriented package. It seeks to make it easier for people to join the workforce by providing support for childcare and paid leave, that will boost labor force participation, help with elder care, put in place training, workforce training, education programs that will boost skills and labor productivity over time. And really many of the pieces in there are very important and climate change and the portions of the package that deal with climate change are critical. You know, we need 50 votes in the Senate to get any of this done. The President has been working with members of the Senate to try to put back, put together a package that has that level of support, and he'll continue to do so. So, if there are certain things that are dropped because of lack of support, they will remain priorities of the Biden Administration and things that President Biden will have several more years to try to get done.

EISEN: At this point, if, with no package on the table and nothing passed and the expiration of the Child Tax Credit, which we saw expire in December. What is the fiscal impact on the economy this year? Are you, are you looking at a big drag that could really slow down consumer spending?

YELLEN: Well, it has been a boost to consumer spending this year. The payments went out monthly, and I believe they amounted to about $19 or $20 billion a month. So, we had very strong fiscal support for the economy this year. That's one of the reasons we had a rapid recovery and next year, the level of fiscal support and beyond will diminish the, there will be more fiscal drag but, you know, households are in good financial shape, in many ways they've come out of this even stronger than they were pre-pandemic. And there is a buffer stock of savings that's accumulated that I think will continue to support the economy in the years ahead even with less fiscal, less fiscal support.

FROST: Secretary Yellen, you've got a year in the books now as Treasury Secretary and I just wondered, your reflections on, on that job compared to being Fed chair both which you enjoyed more and which you also think is, gives you more power more, more sway and influence over the US economy?

YELLEN: Well, they're both great jobs and I feel very privileged to have had the chance to, to hold both of them. They are really different jobs. The Fed job has a narrower focus, but it's a very important focus on monetary policy and financial markets. There is some overlap at Treasury and very concerned with financial markets, threats to financial stability and now as Treasury Secretary Chair the Financial Stability Oversight Council, which I previously served on, but the Treasury role is very large. We play an important role in working with our allies around the world on a whole range of issues from climate change to support for recovery that's even across the global economy, helping relieve debt of poor countries, and we have a huge role in running almost a trillion dollars of programs here at Treasury that are part of the American Recovery Plan. So, there are a wider range of responsibilities, many operational but also an important role in broader economic policy.

FROST: And you mentioned Secretary Yellen that you hoped and expected inflation would get back towards 2% by the end of the year from the 7% level we've just seen. If it doesn't, who deserves more of the blame, you and the President in the political seats or, or Chair Powell and the Fed seat?

YELLEN: Well, these responsibilities that are shared. The Fed clearly has an inflation mandate to be combined with a mandate to achieve full employment. The world is a very uncertain place. We have been hit by a pandemic that has created economic challenges that none of us anticipated, and it is our hope and intention to bring inflation down to levels that are consistent with the Fed's interpretation of price stability. But let's remember that we've had an enormous success. When you look at all the bad things that did not happen that could have happened without the interventions that we made with the American Recovery Plan, we could be looking at high unemployment. We could be looking at an increase in homelessness with a, we could be looking at an increase in child poverty. These are bad things that we were tremendously worried could have happened. Young people entering a weak labor markets scarring their entire labor market experiences. These bad things did not happen and, you know, inflation rose more than most economists including me expected and of course, it's our responsibility with the Fed to, to address that and we will.

EISEN: Secretary Janet Yellen, thank you so much for joining us to mark this one-year anniversary in the Biden administration. We appreciate it.

YELLEN: Thank you, Sara.

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