US Treasury Secretary Janet Yellen said on Thursday it was possible to bring inflation back to around 2% by the end of the year, a rate deemed good for the economy.
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“I expect annual inflation to remain, for much of the year, above 2%,” said Joe Biden’s Minister of Economy and Finance, interviewed on CNBC.
“But if we are successful in controlling the pandemic, I expect inflation to decline over the course of the year and hopefully return to normal levels by the end of the year, around 2%,” she said, while stressing that there was “a lot of uncertainty.”
Prices climbed 7% in the United States in 2021, their fastest pace in nearly 40 years.
“We’re doing everything we can to address the supply chain issues that are driving up prices,” Yellen said, adding that “the Federal Reserve has an important role.”
She acknowledged that the level and persistence of inflation had been much higher than had been expected: “we have been hit by a pandemic which has created economic challenges that none of us had anticipated”.
“Inflation has risen more than most economists, including me, expected and of course it is our responsibility with the Fed to fix it and we will” , she assured.
The Republican opposition, in particular, accuses Joe Biden’s fiscal policy of being inflationary, through overly generous stimulus plans. But for Janet Yellen, these expenses prevented the first economy in the world from sinking, and made it possible to limit inequalities.
She thus invited to look at “all the bad things (…) that could have happened without the interventions that we made with the American recovery plan”, such as “a lasting high unemployment rate” or the worsening “child poverty”.
“We were very worried (that this) would happen,” she commented.