Yellen expects high inflation until mid-2022 before easing |
WASHINGTON – Treasury Secretary Janet Yellen has said she expects price increases to remain high until the first half of 2022, but has dismissed criticism that the United States risks losing control inflation.
Inflation is expected to ease in the second half of the year as issues ranging from supply bottlenecks, a tight US labor market and other factors resulting from the pandemic improve, Yellen said on “l CNN’s ‘State of the Union’ on Sunday. The current situation reflects “temporary” pain, she said.
âI don’t think we’re about to lose inflation control,â Yellen said, brushing aside criticism from former Treasury Secretary Lawrence Summers this month. âAmericans haven’t seen inflation like we’ve seen it recently for a long time. But as we get back to normal expect this to end. “
Federal Reserve Chairman Jerome Powell on Friday expressed increased concern over continued high inflation, making it clear that the central bank would start cutting bond purchases shortly, but remain patient to raise rates. interest.
The S&P 500 Index posted its first decline in eight days. Powell said policies are “well positioned” to handle a range of outcomes.
Yellen declined to comment on how she advised President Joe Biden on his decision to re-elect Powell. However, she said financial regulation “got much stronger” under Powell’s tenure, as it did during her own and under his predecessor, Ben Bernanke.
As the pandemic added stress to financial markets, “the core of our financial system has performed very well due to improvements in capital liquidity, risk management, stress testing,” Yellen said. “And those improvements stayed in place during the Powell regime.”
She also said it was “absolutely essential” to raise the US debt ceiling, reiterating previous warnings about the consequences of a possible US default.
The United States posted the second-largest annual budget deficit on record for 2021, as pandemic relief spending supported the federal government’s massive borrowing needs.
The deficit for the fiscal year through September was $ 2.77 trillion, from a peak of $ 3.1 trillion the year before, according to a Treasury Department report released last week. As a share of the economy, the deficit narrowed to 12.4% in the year, from 15% in 2020, the largest since World War II.
âIt’s all about housekeeping, doing what is necessary to pay our bills,â she said. “I trust it will happen.”
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