Treasury Secretary Janet Yellen predicted inflation will be “much lower” by the end of next year, barring an unexpected shock.
In a “60 Minutes” interview broadcast Sunday, Yellen said shipping costs, delivery delays and gasoline — which can contribute to rising prices — are showing signs of easing. “The economy remains prone to shocks,” she said, but the U.S. banking, business and household sectors remain in good shape.
“There’s a risk of a recession. But it certainly isn’t, in my view, something that is necessary to bring inflation down,” Yellen said.
Critics have been warning that Federal Reserve Chair Jerome Powell’s continued interest rate hikes to tame inflation could lead to a recession. Powell has hinted the Fed will keep raising rates, but in smaller increments to balance the risk starting this month.
Yellen explained that for inflation to continue trending down, economic growth has to ease, which also will affect hiring. Many U.S. companies have announced layoffs in recent months, including tech giants like Meta and Amazon.
“We have a healthy labor market. To bring down inflation, and because almost everybody who wants a job has a job, growth has to slow,” Yellen told CBS’ Norah O’ Donnell.
Yellen also said the U.S. is doing everything in its power to end Russia’s war in Ukraine, hoping to limit the world economic impact.
The Russian oil price cap agreed upon by G-7 countries, which started last week, aims to “suppress Russian revenue, make it more difficult for them to fight the war, and keep global prices in a moderate range, and avoid spikes,” Yellen explained.
Asked how long the U.S. can keep sending financial support to Ukraine, Yellen replied: “For as long as it takes.”