“There is potential for continued instability and uneven global growth as countries continue to fight the pandemic,” Yellen said during a hearing with the FSOC’s annual report to Congress.
“Russia’s unprovoked invasion of Ukraine has further heightened economic uncertainty,” said Yellen, who chairs the FSOC, during a Senate banking committee hearing.
Yellen said financial regulators would continue to monitor developments and “coordinate actions with the development of risks and threats.”
Concerns about inflation have contributed to huge volatility on Wall Street, as investors are worried about the Federal Reserve’s plans to significantly raise interest rates.
However, Yellen said the US financial system “continues to function in an orderly manner”.
At the same time, she acknowledged that estimates of some unspecified assets “remain high compared to historical values”.
Secretary Yellen also warned that Western sanctions have dealt a severe blow to the Russian economy since the invasion of Ukraine.
“Their economy is clearly in recession,” Yellen told lawmakers, adding that there are forecasts that the Russian economy will shrink by 10% to 15%.
Inflation in Russia is probably around 20% this year, Yellen said. That would be more than twice the 8.5% jump in consumer prices in the United States on an annual basis in March.
“Russian companies that have been sanctioned find it almost impossible to gain access to the goods and services they need on world markets,” Yellen said, adding that this includes large defense companies that cannot find computer chips and other components they need. to replenish their defensive arsenals.
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