Treasury Secretary Janet Yellen said Sunday that she doesn’t expect inflation to return to a normal rate until at least the middle of next year — but that doesn’t mean the U.S. is losing control of inflation.
Speaking on CNN’s “State of the Union,” Yellen predicted the spike in inflation will be temporary.
“ “Americans haven’t seen inflation like we have experienced recently in a long time. But as we get back to normal, expect that to end.””
— Janet Yellen
When asked by CNN’s Jake Tapper exactly inflation would fall back to around the 2% target area, Yellen said: “Well, I expect that to happen next year … 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.”
“I don’t think we’re about to lose control of inflation,” Yellen said, rejecting criticism from former Treasury Secretary Larry Summers earlier this month.
Yellen said the rise in inflation is no so much a policy problem as one caused by external factors — the pandemic and supply-chain bottlenecks.
“The COVID crisis markedly diminished spending on services and caused a reallocation of spending towards goods,” she said. “The supply of goods to Americans has increased substantially, but there’s still pressure there.”
Yellen said she expects the supply chain to recover as the pandemic wanes, and said Americans will likely rejoin the workforce in greater numbers as that happens.
Yellen also said lawmakers are considering taxing the unrealized capital gains of billionaires as a way of funding President Joe Biden’s social spending plans, and said she was confident that the debt ceiling will be raised ahead of its December deadline, preventing the government from defaulting.