Russia’s invasion of Ukraine will have “huge economic repercussions in Ukraine and beyond,” Treasury Secretary Janet Yellen told lawmakers on Wednesday. People around the world see rising prices for energy, food and other commodities.
During a hearing before the House Financial Services Committee, Yellen said the invasion disrupted the flow of food to millions of people around the world and drove up prices. Yellen also acknowledged that the sanctions imposed on Russia are pushing up energy prices.
“We think punishing Russia for what it is doing in Ukraine is an important price to pay, but energy prices are rising,” Yellen said. “The prices of wheat and corn that Russia and Ukraine produce are going up, and metals that play an important industrial role — nickel, titanium, palladium — that go into catalysts — the cost of those things is going up.”
On Wednesday, the United States and its allies continuedagainst Russia, including the imposition of increased sanctions on Russia’s largest financial institution and largest privately owned bank.
Together, Russia and Ukraine account for almost a third of world wheat exports. Russia is also one of the largest energy exporters.
“The invasion of Ukraine has also underscored the need for sustainable, affordable, clean, and secure energy for economic growth and security for the United States and governments working with Ukraine [International Financial Institutions]’ Yellen said.
The US last month. While the ban came in collusion with other nations, President Biden acknowledged that some allies in Europe may not be able to join the US.
Yellen was repeatedly pressed by lawmakers on Wednesday whether the United States should go further in its actions against Russia. She warned the US not to act unilaterally towards the country, as allies have so far been crucial to the success of measures taken against the country.
Yellen said she believes both sanctions and export restrictions have deprived Russia of the “war chest” they were counting on.
“I believe the sanctions are having a devastating impact on Russia,” Yellen said. “Russia is almost completely isolated from the international financial system.”
Deutsche Bank on Tuesday revised downwards its forecast for global growth, noting two shocks in recent months – the war in Ukraine and elevated inflation in the US and Europe.
“We now forecast a US recession and a growth recession in the eurozone within the next two years,” the report said. He predicted that the US economy would be in an outright recession by the end of next year.
Brian Deese, director of the National Economic Council, was asked at a Christian Science Monitor event on Wednesday about preparing for a recession in the face of Deutsche Bank’s new forecast and Yellen’s comments. He argued that the US economy has weathered a series of shocks.
“There is no question that the war in Ukraine is a profound global supply shock,” Deese said. “I think the real issue is how well positioned the United States is to get through this. I think the answer to that is uniquely good.”