Treasury Secretary Janet Yellen on Thursday said she believed high U.S. inflation would fall next year, but cautioned there are risks to this outlook.
“I believe it’s going to come down certainly next year, although, let’s be clear, there are risks,” Yellen said, when asked about the inflation outlook at a conference sponsored by the Atlantic Magazine.
“The Russian invasion of Ukraine hasn’t come to an end, we’re seeing [Russian President Vladimir] Putin weaponize oil and gas in fighting this war, so we remain vulnerable to supply shocks. But I think the [Federal Reserve] is clearly committed to bringing inflation down, and I expect that to be successful.”
Yellen, a former Fed chairwoman, spoke a day after the U.S. central bank stepped up its fight against inflation by agreeing to the third straight super-sized increase in interest rates, and signaling more big hikes before the end of the year.
As MarketWatch reports, the Fed’s ultimate goal is to reduce inflation to pre-pandemic levels of 2%. The central bank projected it will reach its inflation target by 2025.
Yellen said she was also skeptical that target would be met next year.
“Two percent is the goal, and perhaps we don’t get there next year, but I certainly expect to see inflation come down.”
The treasury chief was not asked, meanwhile, about the Bank of Japan’s intervention to support the yen USDJPY, -1.20%, the first such move since 1998. The U.S. dollar dropped sharply against the Japanese currency in response to the move.
“The Bank of Japan today intervened in the foreign exchange market,” a Treasury spokesperson said in a statement Thursday. “We understand Japan’s action, which it states aims to reduce recent heightened volatility of the yen.”
The U.S. did not participate in the intervention, Treasury said.