Treasury Secretary Janet Yellen made claims over the weekend that the United States is not losing control of inflation and that she expects inflation to return to normal levels in the second half of next year. In an interview with CNN, Yellen stated that expenditure on President Joe Biden’s domestic infrastructure and Build Back Better programs will be spread out over the next decade, but she did not address whether this would worsen inflation.
“I don’t think we’re about to lose control of inflation,” Yellen said.
“On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement by the middle to end of next year – second half of next year,” Yellen said.
Supply chain complications have troubled the United States and other nations as economic reopenings fuel an increase in demand after the strong rebound from last year.
“As we make further progress on the pandemic, I expect these bottlenecks to subside. Americans will return to the labor force as conditions improve,” she said.
The Federal Reserve has pledged to maintain its benchmark overnight interest rate at zero until the economy reaches full employment and inflation reaches the central bank’s 2% target and is significantly above it for some time.