By Ann Saphir

(Reuters) -U.S. Federal Reserve Chair Jerome Powell is scheduled to give his semiannual testimony on monetary policy on July 9 at the Senate Banking Committee, the office of Senator Sherrod Brown, the committee's chair, said on Monday.

If scheduling proceeds as it has historically, Powell would deliver the same testimony at the House Financial Services committee the following day. Spokespeople for that committee did not immediately respond to a request for information.

Both hearings are typically hours-long affairs, with lawmakers from both sides of the aisle grilling Powell on a range of topics from interest-rate policy to the state of the banking system.

Powell was first appointed as Fed Chair by former president Donald Trump and reappointed for a second term by President Joe Biden. At all turns he seeks to assert the central bank's independence from politics, with any interest-rate decisions driven entirely by the state of the economy.

The Fed last week kept the policy rate in the 5.25%-5.5% range, and signaled it may cut borrowing costs only once this year.

If that forecast - which assumes slow downward progress on inflation and no big cracks in the labor market - pans out, the Fed could be expected to remain on the sidelines until after the November presidential election.

Brown and other Democrats have called on the Fed to cut rates to make homes more affordable. A rate cut before the election could help Biden, a Democrat, in his rematch against Trump, a Republican who has said that he thinks the Fed may lower interest rates to help sway the election.

By Andrew Gray and Jan Strupczewski

BRUSSELS (Reuters) - European Union leaders ended a discussion on who should take the bloc's top jobs for the next five years without agreement on Monday, aiming instead for a decision at a summit next week.

The leaders' meeting was the first since the European Parliament election, which saw gains for the centre-right and right-wing nationalists, but humiliating defeats for French President Emmanuel Macron and German Chancellor Olaf Scholz.

Over dinner in Brussels, the EU's 27 national leaders discussed who should run the powerful European Commission executive body, who should chair their European Council meetings and who should take the post of foreign policy chief.

They had been widely expected to nominate Ursula von der Leyen of Germany for a second term as European Commission chief, Portuguese ex-premier Antonio Costa as Council president and Estonian Prime Minister Kaja Kallas as top diplomat.

But the current European Council president, Charles Michel, said they needed more time.

"It was a good conversation, (it) goes in the right direction, I think. But there is no agreement tonight," he told reporters after the dinner.

Michel said pan-European political parties had made proposals about the posts and more work would be needed to reach an agreement. He did not elaborate on the proposals.

POLE POSITION

Von der Leyen remains in pole position to stay on as European Commission president, buoyed by gains in the June 6-9 elections for her centre-right European People's Party.

Thirteen of the 27 EU leaders are from parties belonging to the EPP. With French and German support too, she would have the qualified majority she requires to be nominated.

France had previously weighed alternatives to von der Leyen, but with a snap parliamentary election called by Macron from June 30, the government now prefers EU stability. Germany has made clear it backs von der Leyen for another term.

A trio of von der Leyen, Costa - a veteran socialist - and liberal Kallas would ensure a political and geographical balance among the top posts.

The leaders are due to make a formal decision at a summit on June 27-28. Von der Leyen would still then need backing from the European Parliament, which votes in its first session from July 16.

The full 27-member Commission, including the foreign policy chief, also needs parliamentary support.

The leaders also discussed the next five-year legislative cycle, with a stress on common values, defence and economic competitiveness. They are due to confirm their "strategic agenda" guidance at the end-June summit.

The leaders should shortly have a report by Mario Draghi, former Italian premier and president of the European Central Bank, on boosting the EU's economic prospects. In a speech on Friday, he said the bloc needed cheaper energy and a capital markets union to steer private savings towards investment.

By Leika Kihara and Takahiko Wada

TOKYO (Reuters) -The Bank of Japan is likely to trim bond buying by around 24 trillion yen ($152 billion) annually in new guidance due next month, but forgo raising interest rates at least until September, former board member Makoto Sakurai said on Monday.

At its policy meeting on Friday, the BOJ decided to start trimming its huge bond purchases and announce a detailed plan in July on reducing its nearly $5 trillion balance sheet, taking another step toward unwinding its massive monetary stimulus.

Governor Kazuo Ueda gave few clues on how much the BOJ will actually trim its bond buying, saying only that the taper size will be significant.

"The BOJ has the option of reducing its monthly purchase amount by just one trillion yen. But with the governor having said the size would be 'significant,' there's a good chance it will taper by around 2 trillion yen," Sakurai told Reuters in an interview.

The BOJ currently buys roughly 6 trillion yen of government bonds per month with an allowance of 5-7 trillion yen. It will likely trim the purchase to 4 trillion yen per month, he said.

The BOJ's decision to announce its bond-tapering plan at its next meeting in July 30-31 has heightened uncertainty on whether it will hike short-term interest rates at the same meeting, or hold off until later in the year to avoid upending markets.

Sakurai, who retains close ties with incumbent policymakers, said the BOJ will likely forgo raising rates in July and wait for more clarity on whether summer bonus payments and wage gains will help consumption will rebound.

By Howard Schneider and Francesco Canepa

WASHINGTON (Reuters) - Six months ago the world's major central banks were primed for a move that anyone with a credit card or hoping to buy a home or run a business would cheer: A global shift to lower interest rates that would make borrowing cheaper and loans more available across the board.

Rate cuts are "a topic of discussion out in the world and also a discussion for us," Federal Reserve Chair Jerome Powell said in a press conference last December, when the mood among investors was giddy over the prospect of looser financial conditions, and organizations like the International Monetary Fund worried that Powell and company would jump the gun, cut rates too fast, and undermine efforts to tame inflation.

Those fears were misplaced, it turns out.

The joint easing of monetary policy that appeared imminent at the end of 2023 has largely fizzled as major central banks confronted inflation that proved more persistent than expected, and economic and wage growth that proved more resilient.

Some modest steps have been made, including initial cuts this month by the European Central Bank and Bank of Canada.

But that was largely to deliver on a promise made when inflation seemed to be falling fast, and the mood in Frankfurt, London, Washington and elsewhere has since shifted from the central bank version of "start your engines" to something more akin to "hold your horses."

After rapidly raising interest rates in 2022 and 2023 to fight inflation, the initial move to loosen policy will be "consequential," Powell said at a press conference last week when new projections from Fed policymakers showed them anticipating only a single quarter-percentage-point rate cut by the end of the year, down from the three projected in December and March.

"When we do start to loosen policy, that will show up in significant loosening and financial market conditions," Powell said. "You want to get it right."

BUMPS ALONG THE WAY

Most economists polled by Reuters now expect only one or two Fed rate cuts this year instead of the four seen in a survey last December, before Powell surprised markets by suggesting a pivot to lower rates would come relatively soon. But economists have been more consistent in their views than market pricing.

Economists polled by Reuters six months ago expected the Bank of England to wait until the third quarter to cut borrowing costs, in line with current nearly-unanimous expectations for a move in August. Market pricing back in December, meanwhile, implied a first cut in May followed by three more over the year.

While headline inflation has tumbled to close to the BoE's 2% target, it was much higher than expected in the key services sector in April, and 6% annual wage growth in May remained roughly double the level consistent with the target.

Accordingly, the BoE is expected to keep rates on hold in its last policy meeting of Prime Minister Rishi Sunak's term - meaning that the move towards lower borrowing costs will await Britain's next government instead.

Economists' predictions for the ECB's first move have also held up, correctly forecasting a cut in June. But again, market pricing has shifted dramatically: back in December it implied 140 basis points of cuts in the year ahead, starting in March. Now market prices barely correspond to one further rate cut this year.

ECB policymakers, however, have long warned of "bumps in the road" as they bring inflation back to target and - by indicating early on that the first cut would not come until June - signalled markets might have been getting ahead of themselves.

Those "bumps" may now include how markets have been unnerved by French President Emmanuel Macron's decision to hold a snap parliamentary election that could in usher in a far-right government in Paris next month.

But for now, ECB President Christine Lagarde and her team remain broadly confident that inflation will still tick down to the 2% target by the end of 2025.

"Central banks are managing the trade-off between inflation and economic growth," aware that overly restrictive policy could undermine a fragile recovery in the euro zone economy, ECB policymaker Mario Centeno told Reuters in an interview.

"In the end, the difference between now and a few months ago is not so big. The disinflation story is still intact," the Portuguese central bank governor said.

NO VICTORY DECLARATION

As always, managing expectations is part of the story.

Back in December when the three-cuts-for-2024 outlook first appeared in Fed policymaker projections, Powell in his post-meeting press conference cautioned that "no one is declaring victory" over inflation. But the general tenor of his remarks - with references to "real" and "great" progress being made on inflation - appear to have cemented views that rate cuts were about to commence.

From one perspective, while the first cut may as Powell said last week be "consequential," the symbolic opening of an expected steady decline in borrowing costs, the exact timing may be less so in terms of its macroeconomic effect.

The current strict language about cuts, from Powell at least, may even be more about managing expectations than they are about the actual outlook - of keeping the door open for rates to stay where they are longer again still than anticipated.

Data just before and after the Fed's meeting last week pointed strongly to weakening price pressures, and investors have largely sloughed off Powell's comments and Fed policymakers' new projections to stick with bets that rates will be lowered beginning in September.

Still, the slide has been a big one, with major central banks now allowing "restrictive" monetary policy to weigh on banks, businesses and households for months longer than anticipated. Some worry that may trigger a breaking point.

"Continued restrictive policy risks pushing labor demand down too much and pushing unemployment higher than the current 4%, which the Fed is projecting for the end of the year," Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, wrote in response to last week's Fed decision. "The labor market has seemed invincible for much of the past two years, but its armor can't last forever."

By Liangping Gao and Ryan Woo

BEIJING (Reuters) -China's new home prices fell at the fastest pace in more than 9-1/2 years in May, official data showed on Monday, with the property sector struggling to find a bottom despite government efforts to rein in oversupply and support debt-laden developers.

Prices were down 0.7% in May from the previous month, marking the 11th straight month-on-month decline and steepest drop since October 2014, according to Reuters calculations based on National Bureau of Statistics (NBS) data.

In annual terms, new home prices were down 3.9% from a year earlier, compared with a 3.1% slide in April.

China's indebted property sector, once a key engine of the country's economic growth, has been hit by several crises since mid-2021, including developers defaulting on debt and stalling construction on pre-sold housing projects.

Authorities have stepped up measures to prop up the crisis-hit property sector including facilitating 300 billion yuan ($41.35 billion) to clear massive housing inventory, cutting down payments and easing mortgage rules.

But analysts believe these moves will do little to absorb the massive housing inventory, and the lifting of home purchase restrictions in major cities might further dampen buying sentiment in smaller cities.

New home prices fell last month in nearly all 70 of the cities surveyed by the NBS.

"The latest policies have boosted the second-hand home market in major cities, but the liquidity problem of real estate enterprises has not yet been eased and the confidence crisis in the new-home market has not yet been resolved," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

Separately, official figures on Monday also showed property investment fell 10.1% in the first five months of the year from a year earlier, after dropping 9.8% in January-April. Home sales fell at faster pace in January-May.

China's property market is set to diverge, said Nie Wen, an economist at Shanghai Hwabao Trust, with new home sales in large cities being driven by those who have been able to renovate and sell their existing homes, while real estate in small cities is expected to continue falling due to a housing oversupply and population outflows.

Policymakers are expected to support local governments and state-owned enterprises with discounted loans to buy unsold homes for low-cost housing and at the same time cut interest rates and fees to support homeowners improve their homes, Nie said.

($1 = 7.2557 Chinese yuan renminbi)

By Xie Yu

HONG KONG (Reuters) - Hong Kong investment products such as insurance and high-yield time deposits are seeing resurgent demand from wealthy Chinese who are aiming to shield returns from a domestic economic and property sector downturn and also a weaker currency.

The trend became evident last year but has accelerated in recent months after China relaxed investment rules for the 'wealth connect' programme in February, Hong Kong wealth managers said.

It is sparking a scramble among financial firms in Hong Kong to seize the opportunity and should help the city burnish its status as a wealth hub that has been hit in recent years by pro-democracy protests, Beijing's tighter control, and geopolitical tensions.

Those factors had pushed clients and wealth managers to foray into or expand in rival Singapore.

"There are about 45 million affluent individuals in China, and increasingly they want more international exposure, education, and protection," said Maggie Ng, HSBC's Hong Kong head of wealth and personal banking.

"There is an increasing demand to manage wealth outside of China."

Launched in late 2021, 'wealth connect' allows residents of nine cities in the southern province of Guangdong, which borders Hong Kong, to buy investment products sold by banks in Hong Kong and Macau, while allowing residents of the two offshore centres to do the same in the world's second-largest economy.

Under the programme, investments by mainland investors into Hong Kong and Macau hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the Chinese central bank showed.

Inflows in April grew 70.5% from the preceding month to 22.3 billion yuan, the data showed, while northbound investments in April by Hong Kong and Macau residents were just 14 million yuan, largely unchanged since the programme was launched.

HSBC, a leading wealth manager in Hong Kong, saw new account openings in the city rise by more than three times in 2023 from the pre-COVID level in 2019, driven mainly by Chinese mainland retail wealth clients, said Ng.

The strong momentum has continued in the first quarter of this year, she said, declining to give details.

Apart from the mass affluent who are utilising the cross-border investment channels, ultra rich people from China and Southeast Asia are also exploring their options in Hong Kong, according to executives at global wealth managers.

"If we look at the inquires (from potential family office clients) that we got last year versus the previous year, we're talking about an 85% increase," said L.H. Koh, head of global family and institutional wealth APAC, at UBS.

More than 60% of the inquiries are about setting up family office type entities in Hong Kong by mainly Chinese clients, he said, adding that the trend has continued this year.

'SITTING ON CASH'

While there are still tight capital controls in China, with an individual allowed to remit a maximum $50,000 per year, the tripling of the investment cap to 3 million yuan under the 'wealth connect' programme in February has bolstered outflows.

China presumably is less worried about outflows under the programme because the investments are eventually required to be remitted back to the country.

Wealth managers in Hong Kong are pushing the authorities to further relax the investment scheme to meet the demand of richer clients to move larger sums to Hong Kong, industry executives said.

The Hong Kong Monetary Authority would "continue to explore further enhancement measures in due course, taking into account the industry's feedback as appropriate", the city's de-facto central bank said in a statement to Reuters.

To capitalise on the momentum, some banks in Hong Kong have started offering as much as 10% a year interest rates on short-duration term deposits as part of the wealth link programme compared to about 2% offered by the banks in the mainland.

Besides banks, Hong Kong-based insurers have also seen a surge in demand from mainland customers since border controls previously installed to curb the spread of COVID were lifted in early 2023.

Horace Yep, Citigroup's private banking head of Hong Kong and Greater Bay Area, said the bank saw record new account openings in Hong Kong in 2023, and the momentum remained strong this year, thanks to the demand from mainland Chinese clients.

The surge in demand comes against the backdrop of Chinese mainland investors facing limited options to park their cash at home, as yields of long-dated bonds have dropped to record lows.

China's currency is hovering around its weakest since 2008. And stocks and property have seen returns plunging.

"Many mainland people are now sitting on cash," said 51-year-old Ms. Wang, owner of an internet firm in Shenzhen whose bets on opaque investment products at home soured after the collapse of a leading shadow bank late last year.

Wang said she has since parked her money in a current account in the mainland, and is studying the 'wealth connect' programme now.

($1 = 7.2552 Chinese yuan renminbi)

Investing.com -- U.S. retail sales data will be scrutinized as investors try to assess the impact of higher interest rates on the economy. Investors will also get a chance to hear from several Federal Reserve policymakers during the week. The Bank of England is to meet, along with central banks in Switzerland, Norway and Australia. Here’s your look at what's happening in markets for the week ahead.

1. U.S. retail sales, Fedspeak

Investors trying to get a handle on the strength of the U.S. economy - and the timing of Federal Reserve rate cuts which are now not expected before September - will be looking closely at Tuesday’s retail sales data for May.

Economists are expecting retail sales to have risen 0.3%, after they were unexpectedly flat in April.

Consumer spending is an area of focus for Wall Street as investors seek to gauge the impact of higher interest rates on the economy.

Last week the Fed reiterated that it needs to see more evidence of cooling inflation before lowering borrowing costs.

Investors will also get the chance to hear from several Fed speakers during the week, including New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, San Francisco Fed head Mary Daly and Richmond Fed head Thomas Barkin.

2. China data deluge

China is to release a deluge of economic data this week as investors look for signs that the recovery in the world’s second largest economy is gaining momentum, particularly with the beleaguered property sector continuing to weigh on the outlook.

Data on China's home prices is due on Monday - the first such release after Beijing announced "historic" steps to stabilise the property market last month, though to limited effect so far. May data on industrial output, the urban unemployment rate and retail sales are all due too, with hopes the latter could point to a stronger uptick after April's disappointment.

Still, recent data continues to underscore the need for further stimulus from policymakers with the loan prime rate decision due on Thursday.

Souring trade relations add to the woes, with Europe set to slap extra duties on imported Chinese electric cars.

3. Bank of England meeting

The BoE is to hold its latest policy setting meeting on Thursday and will likely dash any hopes the ruling Conservative party had of a pre-July 4 election rate cut. Markets now expect easing later rather than sooner, pricing a roughly 40% chance of an August quarter point move and a 70% chance in September with pay and services inflation sticky.

The U.K. is to release May inflation data a day before the BoE meets, with the consumer price index expected to come down to the bank’s 2% target for the first time in nearly three years.

But underlying inflation is expected to remain above 3% and with the election campaign in full swing the BoE is seen holding for now.

Switzerland and Norway are also to hold central bank meetings on Thursday. The SNB kicked off rate cuts in March and another cut is seen as 50-50 after steady March inflation data. No change is expected from Norway’s central bank. Meanwhile, Australia's central bank meets on Tuesday but is not expected to ease for some time.

4. Eurozone

The Eurozone is to release the latest set of purchasing manager indexes for June on Friday, with markets watchers on the lookout for signs that the economic recovery in the bloc is gaining momentum.

European Central Bank officials due to speak during the week include President Christine Lagarde and Chief Economist Philip Lane on Monday, and Vice President Luis de Guindos on Tuesday.

Lagarde dodged a question about turmoil in French financial markets on Friday, merely saying the ECB would deliver on its inflation target.

French markets endured another brutal sell-off on Friday as investors cut their positions ahead of a snap election that might give a majority to the far right.

French Finance Minister Bruno Le Maire warned that the euro zone's second-biggest economy was at risk of a financial crisis if the far right won the parliamentary election in the coming weeks.

5. Oil prices

Brent and the U.S. benchmark gained nearly 4% last week, the highest weekly rise in percentage terms since April, buoyed by forecasts for solid demand for crude oil and fuel in 2024.

The U.S. Energy Information Administration (EIA) upgraded its oil demand growth estimate for 2024 slightly, and the Organization of the Petroleum Exporting Countries (OPEC) stuck to a forecast for relatively strong growth of 2.2 million barrels a day (bpd).

The International Energy Agency (IEA) meanwhile cut its demand growth forecast to under 1 million bpd.

However, all three forecasters predicted a supply deficit at least until the beginning of winter, Commerzbank analysts pointed out.

"In view of the still uncertain economic outlook for the major economic regions, a further price increase is not to be expected for the time being," said Commerzbank analyst Barbara Lambrecht.

--Reuters contributed to this report

HANOI (Reuters) -Vietnam's Finance Ministry has proposed to hike a special consumption tax on alcoholic drinks to 100% by 2030, the ministry said, a move that may further hurt the country's beverage industry.

Under the draft proposal which is pending lawmakers' approval, the special consumption tax on beer and strong liquor will be raised to 70%-80% by 2026 and gradually increase it to 90%-100% in 2030, compared with the current 65%.

"Alcoholic drinks and beer prices will increase by 20% in 2026, compared with 2025," the finance ministry said in the proposal, adding that prices would continue to increase by 2%-3%, depending on inflation.

"Levying high tax rates is necessary to help reduce consumption of alcoholic drinks," it added.

Vietnam's beer industry, dominated by four major brands -Dutch Heineken (AS:HEIN), Danish Carlsberg (CSE:CARLb) and local Sabeco and Habeco - has already been hit by the country's strict drink and driving law, under which the alcohol content limit for drivers is zero since 2019.

Heineken Vietnam Brewery, the country's beer market leader with a 37.6% share, recorded a 24% decline in total consumption last year, according to a May report from FPT Securities.

Sabeco, accounting for 34.4% of the market, also posted a 12.6% fall in consumption. On the contrary, Carlsberg's domestic consumption rose by 8%, it added.

Last year, the beer industry's revenue decreased 11% and profits decreased by 23%, according to estimations of the Beer - Alcohol - Beverage Association.

Shares in Sabeco fell by 3.66% on Friday morning after the ministry's proposal.

A Sabeco spokesperson declined to comment but said it would contribute the company's opinion to the Beer - Alcohol - Beverage Association as a member of the Association.

Carlsberg and Heneiken did not immediately respond to Rueters' requests for comment.

The finance ministry also proposed a hike in special consumption tax on soft drinks and cigarettes.

TOKYO (Reuters) - The Bank of Japan kept interest rates unchanged on Friday but said it would trim bond buying in the future to allow long-term interest rates to move more.

At its two-day policy meeting, the central bank said it would continue to buy government bonds at the current pace. But it decided to come up with a specific plan to trim purchases for the next one to two years, at a subsequent policy-setting meeting in July.

As widely expected, the BOJ maintained its short-term interest rate target in a range of 0-0.1% in a unanimous vote.

Governor Kazuo Ueda is expected to hold a news conference to brief on the decision at 3:30 p.m. (0630 GMT).

By Michael S. Derby and David Lawder

NEW YORK/WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen said on Thursday that U.S. public investments that attract private capital are crucial to promote sustainable and inclusive growth over the long term, but warned that China's model of massive state industrial subsidies were unacceptable to the world.

Yellen said in prepared remarks to the Economic Club of New York that the traditional Republican model of "supply-side economics" relies too heavily on tax cuts to spur investment and has failed to benefit enough workers.

Yellen's speech to top business executives and Wall Street leaders marked a rebuttal of sorts to a presentation that Republican presidential candidate Donald Trump delivered on his economic vision to top U.S. CEOs in Washington, including Apple (NASDAQ:AAPL) CEO Tim Cook and JP Morgan Chase (NYSE:JPM) CEO Jamie Dimon.

The Business Roundtable event in Washington also was expected to feature a presentation by White House Chief of Staff Jeff Zients, representing President Joe Biden, who is attending a summit of G7 leaders in Italy.

Trump's campaign has been light on specifics about his economic plans, but his message to CEOs emphasized tax cuts for businesses and reduced business regulation, according to Trump economic adviser Stephen Moore.

Trump has pledged to continue tax cuts that he signed into law in 2017 and has said he wants to offer tax relief to the middle class, reduce regulations and expand fossil-fuel energy production while reversing Biden's clean energy initiatives. In Nevada on Sunday, he floated a plan to stop taxing service workers' tip income.

"We have learned through experience that heavy-handed central planning through government dictates is not a sustainable economic strategy," Yellen said in prepared remarks. "But neither is traditional supply-side economics, which ignores the importance of public infrastructure, education and workforce training and government-supported basic research."

Tax cuts for the wealthy and deregulation have not fueled "growth and prosperity for the nation at large," she added.

Yellen highlighted the Biden administration's major legislative initiatives to invest in the U.S. economy with a 2021 infrastructure law and semiconductor investments and clean energy tax credits passed in 2022.

These included provisions to train workers and have resulted in $850 billion worth of new private-sector manufacturing investments in the U.S. since Biden took office in 2021, she said.

"It's been clear to President Biden and me that our economic strategy cannot be driven by either the public or private sector alone," she said. The doctrine she calls "modern supply-side economics" requires public interventions to "create a supportive environment for business and fuel private sector investments."

She said that a strong U.S. economy was helping to drive global growth, with falling inflation and high investment returns, and was optimistic that these trends would continue.

CHINESE SUBSIDIES

Yellen also sought to contrast the Biden approach with that of China, saying that excessive government subsidies for strategic industries have fueled excess manufacturing capacity far above weak domestic demand. A flood of exports resulting from this overinvestment now threatens jobs around the world and is leading to new trade barriers in the U.S. and elsewhere.

"China cannot assume that the rest of the world will rapidly absorb huge quantities of excess production to the detriment of domestic industries in other countries," Yellen said.

"If China continues on this path, I fear that its policies may interfere significantly with our efforts to build a healthy economic relationship," Yellen said. But she repeated her view that decoupling the world's two largest economies would be detrimental to U.S. interests.

Asked by reporters later about the possibility the Treasury could impose secondary sanctions on a Chinese bank for violating U.S. sanctions on Russia through processing transactions that aid Moscow's war production, Yellen said she believed the largest Chinese banks were wary of such deals.

"I’m certainly not going to say that we would not be willing to designate a large bank if we saw systematic violations,” Yellen said, adding: "The largest banks in China really, really value their correspondent banking relations."