US Inflation Likely to Ease if Biden Administration Successful in Controlling Pandemic - Yellen
23:32 GMT 20.01.2022 (Updated: 13:36 GMT 06.08.2022)
© NICHOLAS KAMMUS Treasury Secretary Janet Yellen speaks during a meeting with business leaders and CEOs on the need to address the debt limit, on October 6, 2021, in the South Auditorium of the White House in Washington, DC.
© NICHOLAS KAMM
WASHINGTON (Sputnik) - The Biden administration is confident that it can subdue US inflation growing at 40-year highs if it can bring the coronavirus pandemic under control, US Treasury Secretary Janet Yellen said in an interview.
"Inflation rose by more than most economists, including me, expected and of course it's our responsibility with the Fed to address that," Yellen told CNBC on Thursday. "And we will."
The US Consumer Price Index, an important barometer for inflation, grew by 7% in the year to December, expanding at its fastest rate since 1982.
"I expect inflation throughout much of the year... to remain above 2%," Yellen said. "But if we’re successful in controlling the pandemic, I expect inflation to diminish over the course of the year and hopefully revert to normal levels by the end of the year around 2%."
The Fed, or Federal Reserve, says the United States probably needs a series of rate hikes to counter such inflation, triggered by trillions of dollars of pandemic relief spending, higher wage payouts and supply chain disruptions. The central bank slashed interest rates to almost zero after the outbreak of the novel coronavirus crisis in March 2020, and has kept them there since.
The Fed’s target for inflation is 2% per year. Aside from keeping to its inflation target, the central bank is also responsible for ensuring maximum employment among Americans. That makes any rate hike it executes not only economically-sensitive but also socially- and politically-potent.
The United States has recorded nearly 69 million total COVID-19 cases since the start of the pandemic, and nearly 18 million of them have been reported over the past month.