Deputy US Treasury chief says soft landing is possible

DEPUTY US Treasury Secretary Wally Adeyemo said on Wednesday (Sep 28) the Biden administration feels confident about the US economy going forward and that it is possible to bring down inflation while maintaining growth.

“We come into this moment from a position of strength,” he said, adding that consumer and corporate balance sheets are in good shape. He was speaking at an investment conference in New York.

Asked whether the US economy was heading to a recession, Adeyemo said there was “a path” to reduce price pressures while maintaining momentum in the US economy and a healthy labour market.

The US is facing stubbornly high inflation, which the Federal Reserve (Fed) is seeking to counter by tightening monetary conditions through a series of rapid and sizeable interest rate hikes that have raised the prospect of an upcoming economic contraction.

Adeyemo, however, said a “soft landing” - that the Fed may tame inflation and avoid a recession - was possible, but that external factors that have led to higher prices such as Russia’s war in Ukraine and Covid-19 lockdowns continue to be headwinds for the US economy.

“We have the capacity ... to take steps that we need to bring down inflation, but also make the needed investments to make sure that the economy continues to grow,” he said. REUTERS