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Rates may have to rise somewhat to keep economy from overheating

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Janet Yellen, U.S. Treasury secretary, speaks during the virtual Leaders Summit on Climate in a video screenshot on Thursday, April 22, 2021.

White House | Bloomberg | Getty Images

Treasury Secretary Janet Yellen conceded Tuesday that interest rates may have to rise to keep a lid on the burgeoning growth of the U.S. economy brought on in part by trillions of dollars in government stimulus spending.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said during an economic seminar presented by The Atlantic. “Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

“But these are investments our economy needs to be competitive and to be productive. I think our economy will grow faster because of them,,” she added.

Since the Covid-19 pandemic broke in March 2020, Congress has allocated some $5.3 trillion in stimulus spending, resulting in a more than $3 trillion budget deficit in fiscal 2020 and a $1.7 trillion shortfall in the first half of fiscal 2021.

The Biden administration is pushing an infrastructure plan that could see another $4 trillion spent on a variety of longer-term projects.

Though she said the U.S. needs to focus on fiscal responsibility longer term, she said spending on matters central to the government’s mission has been ignored for too long.

President Joe Biden is “taking a very ambitious approach, making up for really for over a decade of inadequate investment in infrastructure, in R&D, in people, in communities and small businesses, and it is an active approach,” Yellen said. “But we’ve gone for way too long on letting long-term problems fester in our economy.”

The Federal Reserve, which Yellen led from 2014-18, has kept short-term interest rates anchored near zero for more than a year, despite an economy growing at its fastest pace in nearly 40 years. Central bank officials have vowed to keep accommodative policy in place until the economy makes “substantial further progress” toward full and inclusive employment and inflation that averages around 2% over a longer term.

Inflation concerns have arisen due to all the spending and the rapid growth, but Fed officials have said that after a brief rise this year, price pressures are likely to ebb.

Yellen has said she is largely not concerned about inflation becoming a problem, though she has added that there are tools to address it should that happen. Fed Chairman Jerome Powell recently said that the primary tool to control inflation is through higher interest rates.

As for concerns about the large deficits the U.S. is running, Yellen said “we need to pay for some of the things that we’re doing” though the government still has “a reasonable amount of fiscal space.”

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Biden urges end to violence

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President Joe Biden pauses while speaking in the East Room of the White House in Washington, D.C., U.S., on Monday, May 10, 2021.

Chris Kleponis | Bloomberg | Getty Images

President Joe Biden on Thursday called for a de-escalation of violence in Israel and the Gaza Strip as attacks intensify and more people are killed.

The president told reporters in the White House that he expects to have additional conversations with leaders in the region.

Israeli ground forces have been bombing and sending troops and tanks to the Gaza border after Palestinian militants fired more rockets into Israel on Thursday.

At least 103 people have been killed, including 27 children, in Gaza in the past four days, according to Palestinian medical officials. Seven people have been killed in Israel, including a soldier and some civilians, amid airstrikes and rocket attacks between the Israeli military and militant group Hamas, which governs the Gaza Strip.

A picture shows the explosion after an Israeli strike targeted a building in Gaza City on May 14, 2021.

Mahmud Hams | AFP | Getty Images

Israel said it is deploying troops to the Gaza frontier ahead of a potential ground invasion of the Hamas-ruled territory following four days of continued cross-border conflict. The increased military response has also followed violence among Arab and Jewish mobs in the streets of Israel this week, which led to dozens of arrests.

Israel Prime Minister Benjamin Netanyahu warned in a televised speech that the escalating conflict has put Israel in two fighting campaigns — in Gaza and in Israel’s cities —and reiterated his promise to deploy military to combat violence in the cities.

“I again call on the citizens of Israel not to take the law into their own hands; whoever does so will be punished severely,” Netanyahu said. “We will act with full force against enemies from without and lawbreakers from within in order to restore calm to the state of Israel.”

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A ground troop invasion of Gaza has not yet been announced. Some world leaders and lawmakers have condemned the conflict and urged against violence they argued could escalate into an all-out war.

Israel President Reuven Rivlin urged against a “senseless civil war” amid unrest in towns and cities. U.N. Secretary-General Antonio Guterres called for an “immediate de-escalation and cessation of hostilities” in the region.

“Too many innocent civilians have already died,” Guterres wrote in a tweet. “This conflict can only increase radicalization and extremism in the whole region.”

Palestinians assess the damage caused by Israeli air strikes, in Beit Hanun in the northern Gaza Strip, on May 14, 2021.

Mahmud Hams | AFP | Getty Images

Sen. Chris Murphy, D-Conn., the chairman of the Foreign Relations Subcommittee, urged a ceasefire in the region as quickly as possible to prevent more civilian deaths.

“Ground operations will not stop the rockets falling on Israel, or solve the fundamental security challenges that Israel faces,” Murphy said in a statement on Thursday. “Only a ceasefire in the short-term, and a real path to a viable two-state future in the long-term can do that.”

Secretary of State Antony Blinken confirmed Wednesday that the U.S. is sending Hady Amr, deputy assistant secretary of state for Israel and Palestinian affairs, to urge Israelis and Palestinians to de-escalate the violence.

The U.S. State Department on Thursday also raised its travel advisory to Israel, citing armed conflict and civil unrest, and told people not to travel to Gaza due to Covid-19 and conflict.

— Reuters and Associated Press contributed reporting

Israeli soldiers of an artillery unit gather near the border between Israel and the Gaza Strip, on its Israeli side May 14, 2021.

Amir Cohen | Reuters

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Greece welcomes tourists again ahead of summer as vaccination rates pick up

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Aerial images of Kea island also known as Gia or Tzia, Zea, and, in antiquity, Keos, is a Greek island in the Cyclades archipelago in the Aegean Sea. Kea is part of the Kea-Kythnos regional unit.

NurPhoto | NurPhoto | Getty Images

LONDON — Andreas Patiniotis can’t help sounding cheerful as Greece once again welcomes tourists back to the country.

“I’m very happy,” said the owner of four hotels in one of Greece’s most iconic holiday destinations, Santorini.

And that feeling is spreading across this entire sunny nation, with the economy relying heavily on international visitors.

In 2020, Greece’s gross domestic product sank more than 8% and a large part of that was due to the lack of tourists.

This year, the government expects the whole summer season to be double 2020 levels, Alex Patelis, an economic advisor to the Greek prime minister, told CNBC on Thursday.

He said this summer “is going to be much easier than before.” He said the industry would have now adjusted to Covid-19 safety rules; the vaccination campaign is underway both domestically and abroad; and travelers are keen to seek out some sun.

In fact, the main message in the government’s latest tourism campaign is: “All you want is Greece” — looking to lure mainly northern Europeans that are desperate for some warmer weather after more than a year in lockdowns and strict social-distancing measures.

SANTORINI, GREECE – 2020/09/22: View of Oia village of Santorini volcano island during sunset.

SOPA Images | LightRocket | Getty Images

One of the key government strategies to support tourism was to waive priority for certain age groups and the medically vulnerable in its vaccination program, instead focusing on the residents of the many Greek islands. The idea is to ensure that tourist hotspots are protected before the large number of visitors arrive.

Athanasia Kokkinogeni, 31, is fully vaccinated. She told CNBC that in her home island, Kythnos, big hotel chains have been remodeling and upgrading ahead of the summer season.

“In general, there’s optimism,” she said, noting that some tourists have already started to arrive. The official date for the tourism industry to reopen is Friday but some establishments have been working over the past days to deal with upcoming bookings.

Data shows that as of Wednesday more than 25% of the Greek population have received at least one dose of a vaccine. This is largely in line with the whole of the European Union, which has around 30% of the adult population vaccinated with at least one dose.

Brits to quarantine?

The 2021 summer season will also depend on whether governments in some countries, such as the U.K. and Germany, lift their quarantine policies for when holidaymakers return from Greece. The two nations are among the most important for Greek tourism.

The British government recently decided to not include Greece on its “green list” of foreign destinations, meaning travelers from England face a period of quarantine when they return from the Mediterranean nation.

“All of tourism is very important,” Patelis told CNBC. “But we are optimistic we will be included soon,” he said regarding the U.K. green list. 

Panoramic view of Thera and Imerovigli of Santorini Volcanic Island in Cyclades – Aegean sea.

NurPhoto | NurPhoto | Getty Images

The British government is due to revise its green list every three weeks.

Quarantine requirements are an impediment to tourism. However, the European Union is working on a Covid-19 certificate to promote intra-EU travel. The idea is that people that have received a negative coronavirus test, have been vaccinated, or have recently recovered from the disease will not have to quarantine.

“We hope this will be the last summer like this,” Patiniotis in Santorini told CNBC.

A couple of tourists looks at the Balos beach and its lagoon in the north west of the island of Crete, on May 13, 2021.

LOUISA GOULIAMAKI | AFP | Getty Images

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Irish health service hit by ‘sophisticated’ ransomware attack

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An ambulance arrives at the A and E department of the Mater Misericordiae University Hospital in Dublin on Monday, 18 January, 2021.

Artur Widak | NurPhoto via Getty Images

LONDON — Ireland’s health service shut down its computer systems on Friday after being hit with a “sophisticated” ransomware attack.

The Irish Health Service Executive said there was a “significant ransomware attack” on its IT systems, without commenting further on specifics.

“We have taken the precaution of shutting down all our IT systems in order to protect them from this attack and to allow us (to) fully assess the situation with our own security partners,” the HSE said in a tweet Friday.

“We apologise for inconvenience caused to patients and to the public and will give further information as it becomes available.”

Ireland’s vaccination program has not been affected and appointments will go ahead as planned, but the registration portal has been taken offline. Doctors also can’t refer people for Covid-19 tests, so patients have been told to use walk-in testing centers. HSE said its ambulance service was operating normally.

Dublin’s Rotunda Hospital, a maternity hospital, said all outpatient visits for Friday have been canceled, except for women who are 36 weeks pregnant or later. All gynecology clinics are canceled.

“It’s very sophisticated,” Paul Reid, HSE’s chief executive, told RTE Radio 1. “It is impacting all of our national and indeed local systems that would be involved in all of our core services.”

“We did become aware of it during the night and we’ve been obviously acting on it straight away. The major priority is obviously to contain this. But it is what we would call a human-operated ransomware attack where they would seek to get access to data.”

Ransomware attacks

Ransomware is a type of malicious software that’s designed to block access to a computer system. Hackers demand a ransom payment — typically cryptocurrency — in return for restoring access.

In 2017, the U.K.’s National Health Service was one of many organizations hit by a malware known as WannaCry.

Peter Carthew, director of public sector U.K. and Ireland at security firm Proofpoint, said health-care organizations are “high value targets for ransomware attacks.”

“They would have the highest motivation to pay up to restore systems quickly,” Carthew said via email.

“Given the nature of the industry, healthcare personnel are often severely time constrained, leading them to click, download, and rapidly handle email, while possibly falling victim to carefully-crafted social engineering based email attacks,” he added.

The news follows a major cyberattack on Colonial Pipeline in the U.S. that crippled gas delivery systems in Southeastern states. Colonial restarted operations Wednesday afternoon but said the delivery schedule wouldn’t return to normal for several days. The firm paid a $5 million ransom to hackers.

The attack was believed to have been perpetrated by the hacker group DarkSide. DarkSide is a relatively new group, but cybersecurity analysts believe they are dangerous. The group claimed on Wednesday to have attacked three more companies, despite the global outcry over its attack on Colonial.

HSE wasn’t the only organization to announce on Friday that it had been hit by a ransomware attack.

Toshiba Tec, a division of Japanese tech conglomerate Toshiba, said its European business was the victim of a ransomware attack on May 4, according to Reuters. The company said the attack came from DarkSide.

– CNBC’s Sam Shead and Eamon Javers contributed to this report.

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