US Treasury Secretary Janet Yellen said on Tuesday that Western sanctions have delivered a powerful blow to Russia’s economy following the invasion of Ukraine.
“Their economy is clearly in recession,” Yellen told lawmakers during a hearing on the Financial Stability Oversight Council’s annual report to Congress, adding that there are forecasts the Russian economy will contract by 10% to 15%.
Inflation in Russia is probably running around 20% this year, Yellen said. That would be more than double the 8.5% year-over-year jump in consumer prices in the United States in March.
“Russian firms that have been sanctioned are finding it almost impossible to gain access to goods and services that they need in global markets,” Yellen said, adding that this includes major defense firms that can’t find the computer chips and other components they need to restock their defense arsenals.
Earlier, Yellen said that “Russia’s unprovoked invasion of Ukraine has further increased economic uncertainty.”
The war in Ukraine has disrupted supplies of food and energy, contributing to the highest level of inflation in decades. The average price of regular gasoline has increased about 25% to record highs since Russia invaded Ukraine in late February.
Yellen said financial regulators will continue to monitor developments and “coordinate actions as the risks and threats evolve.”