Speaking to the ABC network, Yellen maintained that “we have had high inflation so far this year, and that ensures a higher inflation for the rest of the year. I hope the economy slows down but I don’t think a recession is inevitable“.
The US inflation accelerated to 8.6% in Maya new high in the past 40 years indicating that price pressures are taking hold in the economy.
Those figures dashed any hope that inflation would start to ease, prompting the Federal Reserve (FED) to unleash its biggest interest rate hike since 1994.
For Yellen, reasons behind stubborn inflation are “global, not local”“, while noting as major problems, “the interruption in energy supply due to the war in Ukraine and goods arriving from China, where Covid-related lockdowns continue”.
“These factors are unlikely to subside immediately,” Yellen said.while anticipating that “a tax exemption on gasoline is worth considering if it can help consumers weather inflation.”
Along the same lines, the president of the Cleveland Federal Reserve, Loretta Mester, maintained that “the threat of a recession in the US is increasing. The risks of recession are increasing in part because monetary policy could have pivoted a bit before”.
In a report to the CBS network, Mester considered that “it will take several years for the annual inflation rate to approach the FED’s 2% target.”
For his part, the director of the White House National Economic Council, Brian Deese, painted a more optimistic picture of the economy than Yellen and what Fed officials say, noting that “independent forecasters see inflation starting to moderate in the course of this year”.
“We have real strengths in this economy,” Deese told CBS, later noting that “the administration is looking to bring down inflation in a way where we don’t have to give up all of those economic gains.”
Source: Ambito
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