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US Treasury Secretary Janet Yellen has strongly refuted allegations of manipulating the issuance of Treasury securities. These accusations were made by economist Nouriel Roubini who suggested that such manipulation was aimed at reducing real borrowing costs across the economy.
What Happened: Yellen dismissed Roubini’s argument that the Treasury had a strategy to ease financial conditions, in an interview with Bloomberg.
“I can assure you 100% that there is no such strategy. We have never, ever discussed anything of the sort,” Yellen said.
The paper, co-authored by Roubini and Stephen Miran, a former Treasury official under President Donald Trump, claimed that the Treasury’s actions in the fall of last year reduced 10-year Treasury yields by a quarter of a percentage point.
This is roughly equivalent to a full percentage point reduction in the Federal Reserve’s benchmark rate.
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Joshua Frost, the Treasury’s assistant secretary for financial markets, defended the department’s actions, stating they were within market participants’ expectations.
Yellen supported Frost’s statements, saying his speech provided the best explanation for the department’s approach.
Why It Matters: The allegations against Yellen come in the wake of a series of events that have put her in the spotlight.
Earlier this month, she was accused by Republican lawmakers of manipulating Treasury debt auctions to stimulate the economy and enhance President Joe Biden‘s image. This latest development is a continuation of the scrutiny Yellen has been facing.
Yellen also defended the Federal Reserve’s political independence against attempts by Trump allies to undermine it.
In June, she publicly criticized Trump’s proposal to replace parts of the U.S. income tax with increased tariffs on imported goods.
Later that month, she expressed confidence in the American economy, dismissing the possibility of a recession and predicting that inflation would reach the Federal Reserve's 2% target by next year.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Flickr
