(Bloomberg) -- U.S. Treasury Secretary Janet Yellen said she continues to forecast inflation falling close to 2% by the end of 2022.
“I expect inflation throughout much of the year -- 12-month changes -- to remain above 2%,” Yellen said Thursday in an interview with CNBC television. “But if we’re successful in controlling the pandemic I expect inflation to diminish over the course of the year and hopefully to revert to normal levels by the end of the year, around 2%.”
The consumer price index rose 7% in the 12 months through December, the most in almost 40 years, damaging President Joe Biden’s popularity and putting more pressure on the Federal Reserve to sharply tighten monetary policy. The Fed in December signaled it’s likely to raise interest rates by three-quarters of a percentage point and begin trimming its $8.9 trillion balance sheet this year.
Yellen said inflation is a “shared responsibility” between the administration and the Fed, and expressed confidence the central bank was moving appropriately.
The Treasury chief acknowledged the U.S. economy had been buoyed in 2021 by fiscal stimulus, which is now waning, but said strong household balance sheets should continue to keep demand healthy.
“Households are in good financial shape -- in many ways have come out of this even stronger than they were pre-pandemic,” she said. “There’s a buffer stock of savings that accumulated that I think will continue to support the economy in the years ahead, even with less fiscal support.”
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