- Yellen Explained the Market-Shaking Interest Rate Messages
- EU and India Restart Trade Talks
- G7 Foreign Ministers Meeting Begins in London
Yellen Explained the Market-Shaking Interest Rate Messages
US Treasury Secretary Janet Yellen said interest rate hikes might be required to prevent the economy from overheating due to the White House’s plan to increase spending. Yellen took a step back after her announcement yesterday and stated that she did not see any problem with the increase in inflation.
US Treasury Secretary Janet Yellen stated that she does not expect inflation to be a problem for the US economy, adding that the rate hike is not “anticipated or suggested.”
“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 said in taped remarks to a virtual event put on by The Atlantic.
“It could cause some very modest increases in interest rates to get that reallocation, but these are investments our economy needs to be competitive and to be productive (and) I think that our economy will grow faster because of them.”
Stating that she does not think inflation will be a problem for the US economy, Yellen said that even if it does, the Fed has tools to deal with it.
Asked directly about her remarks on rates, Yellen said she neither predicted nor recommended a rate rise.
“If anybody appreciates the independence of the Fed, I think that person is me,” Yellen said.
“I don’t think there’s going to be an inflationary problem. But if there is, the Fed will be counted on to address them,” she added.
Expressing that the expenditures are relatively small compared to the size of the economy, they can cause moderate increases in interest rates, and said that these investments are needed for the economy to be competitive and productive and that the economy will grow faster.
EU and India Restart Trade Talks
The European Union and India are preparing to resume their trade talks, which were suspended in 2013, to strengthen cooperation against China’s economic rise.
“There is clear momentum to strengthen our strategic relations on trade, digital, climate change & multilateralism.” Ursula von der Leyen wrote on her official Twitter account after a “good conversation” phone call, as she termed it, with Modi to “in preparation of the EU-India Summit:” organized by the Portuguese presidency of the Council of the EU, which will take place this Saturday.
In the message, the president of the European Commission is “encouraged” by the “prospect of intensifying” the “trade and investment relations” between the two partners.
With over $100 billion in bilateral trade, the EU is India’s largest trading partner and the second-largest export market after the USA.
If it is approved, the EU and India will say: “We agreed to resume negotiations for a balanced, ambitious, comprehensive, and mutually beneficial trade agreement which would respond to the current challenges,” the draft statement said.
The most problematic aspects of the earlier unsuccessful negotiations between 2007-13 were that India did not want to facilitate access to EU lawyers and was unwilling to open its market to Europe’s automotive parts.
India’s economic growth has overtaken China in recent years, making it an attractive market for Europe. According to EU data, the 27-nation bloc is India’s top export destination, taking about 15% of its foreign sales.
Although India has gradually lowered its tariffs since 1990, the EU still faces high levies exporting crops, food, drinks, and motor vehicles, areas seen as obstacles to a deal.
G7 Foreign Ministers Meeting Begins in London
In two years, ministers from the G7 met face-to-face for the first time, ahead of a leaders’ Cornwall summit in June.
The foreign ministers of the G7 countries, including the UK, Germany, USA, France, Italy, Japan, and Canada, came together. It is the first face-to-face G7 meeting in two years because of the coronavirus pandemic.
Representatives of India, Australia, South Korea, South Africa, and the Association of Southeast Asian Nations have been invited to join their G7 counterparts from Canada, France, Germany, Italy, Japan, the US, and the UK, in a bid to show that the UK, which holds the rotating presidency of the G7 this year, is serious about pivoting to the Indo-Pacific.
Climate change, nuclear negotiations with Iran, ongoing war in Syria, a military coup in Myanmar, the Covid-19 outbreak, Russia and Chinese issues are expected to be discussed.
On the other hand, the visiting foreign ministers also held bilateral meetings among themselves before the meeting. British Foreign Secretary Dominic Raab met yesterday with his US counterpart, Antony Blinken. They discussed NATO’s withdrawal from Afghanistan, Iran, China and the threat posed by Russia.
Blinken said the United States would prefer more stable ties with Russia, but that depended on how Russian President Vladimir Putin decided to act, especially in theatres such as Ukraine, which Blinken will visit later this week.
“We have reaffirmed our unwavering support for the independence, sovereignty, and territorial integrity of Ukraine,” Blinken said.
“We’re not looking to escalate: we would prefer to have a more stable, more predictable relationship. And if Russia moves in that direction, so will we.”