Fed rate hike more to blame for US trade deficit, than China, says Yellen

The former Fed chief said America's appetite for foreign goods is helping create the trade deficits

Federal Reserve interest-rate hikes in response to fiscal stimulus are causing the US trade deficit to widen, not unfair Chinese trade practices, former Fed Chair Janet Yellen said.

Higher interest rates in the US relative to those elsewhere put upward pressure on the US 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.

The former Fed chief, whom US President Donald Trump replaced with Jerome Powell earlier this year, said America’s