The Russian invasion of Ukraine will have “huge economic repercussions in Ukraine and beyond,” Treasury Secretary Janet Yellen told lawmakers on Wednesday. People around the world are seeing rising prices for energy, food and other commodities.
During a hearing before the House Financial Services Committee, Yellen said the invasion has disrupted the flow of food to millions of people around the world and caused prices to rise. Yellen also acknowledged that sanctions imposed on Russia are driving up the price of energy.
“We think it’s a big price to pay to punish Russia for what it’s doing in Ukraine, but energy prices are going up,” Yellen said. “The price of wheat and corn produced by Russia and Ukraine is rising and the metals that play an important industrial role (nickel, titanium, palladium) that are incorporated into catalytic converters; the costs of these things are increasing “.
On Wednesday, the United States and its allies continued increase sanctions in Russia, including the imposition of heavier sanctions on Russia’s largest financial institution and the largest private bank.
In total, Russia and Ukraine account for almost a third of the world’s wheat exports. Russia is also one of the largest exporters of energy.
“The invasion of Ukraine has also underscored the need for sustainable, affordable, clean, and secure energy for the economic growth and security of the United States, as well as the governments associated with the [International Financial Institutions]”Yellen said.
Last month, the US banned oil and gas imports into Russia. Although the ban came in consultation with other nations, President Biden acknowledged that some allies in Europe may not be in a position to join the US in the movement.
Yellen was repeatedly pressured by lawmakers on Wednesday about whether the United States should go further in its actions against Russia. He warned that the US should be careful not to take a unilateral approach to the country, as the Allies have been critical of the success of the actions taken against the country so far.
Yellen said he believes export sanctions and restrictions have deprived Russia of the “war chest” they had.
“I think the sanctions have a devastating effect on Russia,” Yellen said. “Russia has almost completely isolated itself from the international financial system.”
Deutsche Bank downgraded its global growth forecast on Tuesday, noting two shocks in recent months: the war in Ukraine and high inflation in the US and Europe.
“We are now projecting a recession in the US and a growth recession in the euro area over the next two years,” his report said. He predicted that the US economy would be in a total recession by the end of next year.
At a Christian Science Monitor event on Wednesday, National Economic Council director Brian Deese was asked about preparations for a recession amid Deutsche Bank’s new forecasts and Yellen’s statements. He argued that the US economy has been resilient through a series of shocks.
“There is no doubt that the war in Ukraine is a deep global supply shock,” Deese said. “I think the real problem is how well positioned the United States is to navigate this. I think the answer to that is exceptionally good.”
- In:
- Biden Administration
- Ukraine
- Russia
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