Economics
Yellen Says Fed More to Blame for Wider Trade Deficit Than China
- Trump’s fiscal stimulus triggered more rate hikes, Yellen says
- Upward pressure on U.S. dollar leading to larger trade deficit
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Federal Reserve interest-rate hikes in response to fiscal stimulus are causing the U.S. trade deficit to widen, not unfair Chinese trade practices, former Fed Chair Janet Yellen said.
Higher interest rates in the U.S. relative to those elsewhere put upward pressure on the U.S. dollar exchange rate, and "this is part of why we may get a larger trade deficit," Yellen said Tuesday at a conference in Beijing. A stronger dollar tends to lead to higher imports and lower exports, weakening the trade balance.