Understanding the Link Between Stimulus and Inflation

United States Treasury Secretary Janet Yellen, in a recent CNBC interview, hinted at a possible connection between the Biden administration's economic relief measures and a modest uptick in inflation. While acknowledging this potential link, Yellen was quick to point out that the primary catalyst for inflation remains the widespread impact of the COVID-19 pandemic.

Labor Market and Fiscal Concerns

Despite the inflationary pressures, Yellen expressed confidence in the resilience of the labor market, describing it as being in "good shape," albeit with signs of cooling. She also raised alarms over the fiscal implications of repealing Internal Revenue Service funding, warning of an $800 billion surge in the federal deficit.