“Well, it’s a risk. And it’s a risk that we’re working on the price cap to try to address,” Yellen told CNN’s Dana Bash on “State of the Union” when asked if Americans should be worried about gas prices rising again later this year.
“This winter, the European Union will cease, for the most part, buying Russian oil. And, in addition, they will ban the provision of services that enable Russia to ship oil by tanker. And it is possible that that could cause a spike in oil prices,” she added.
Yellen continued: “Our price cap proposal is designed to both lower Russian revenues that they use to support their economy and fight this illegal war, while also maintaining Russian oil supplies that will help to hold down global oil prices. So I believe this is something that can be essential, and it’s something that we’re trying to put in place to avoid a future spike in oil prices.
The maximum price would be set by “a broad coalition” of countries, they said in a joint statement. It would take effect alongside the European Union’s next batch of sanctions, which include a ban on seaborne imports of Russian oil starting in early December.
Yellen on Sunday also underscored her faith in the Federal Reserve to determine how best to avoid an economic recession, but acknowledged a potential recession is “a risk when the Fed is tightening monetary policy to redress inflation, so it’s certainly a risk that we’re monitoring.”
“We’re seeing some slowdown in growth, but that’s natural,” she told Bash, noting the bad shape of the economy President Joe Biden inherited in 2021.
She added that despite higher food and energy prices, “We’ve got a good, strong labor market, and I believe it’s possible to maintain that.”