Treasury Secretary Janet Yellen predicted that inflation would be “significantly lower” by the end of next year, barring an unexpected shock.
In an interview with “60 Minutes” broadcast on Sunday, Yellen said there were signs of easing in transportation costs, shipping delays and gasoline prices – which can contribute to rising prices. “The economy remains vulnerable to shocks,” she said, but the U.S. banking, corporate and private sectors remain in good shape.
“There is a risk of a recession. But in my view that is certainly not necessary to reduce inflation,” Yellen said.
Critics warn that Federal Reserve Chairman Jerome Powell’s continued rate hikes to curb inflation could lead to a recession. Powell has indicated that the Fed will continue to raise rates, but in smaller increments to offset risk, starting this month.
Yellen explained that inflation can only fall if economic growth slows, which will also affect hiring. Many US companies have announced layoffs in recent months, including technology giants such as Meta and Amazon.
“We have a healthy labor market. In order to bring down inflation, and because almost everyone who wants a job has one, growth must be slowed,” Yellen told CBS’s Norah O’ Donnell.
Yellen also said the US would do everything in its power to end Russia’s war in Ukraine in the hope of limiting its impact on the global economy.
The cap on Russian oil prices, agreed by the G-7 countries and which came into force last week, aims to “squeeze Russian revenues, make it harder for the country to wage war and keep world market prices moderate and avoid price spikes,” Yellen said.
When asked how long the US could continue to provide financial support to Ukraine, Yellen replied: “As long as it is necessary.”
