Janet Yellen: ‘Inflation will ease around year’s end’

Officials in the U.S. administration have different views on the direction of high inflation in the U.S. Forecasts on how long inflation will continue affect the Fed’s interest rate policy going forward.

U.S. Treasury Secretary Janet Yellen told a Senate hearing on Wednesday, “Inflation will ease around year’s end than now.” She said that the current bottleneck in the supply network will be eased over the next several months, adding that most indicators on inflation will return to the Fed’s annual target of 2 percent from next year.

When asked by Senators high long the 5% inflation rate will continue to hold, she replied, “The inflation rate will approach 2 percent until year’s end or early next year.” US authorities including Secretary Yellen and Fed Chairman Jerome Powell have maintained the position that ‘recent inflation is a temporary phenomenon that has emerged due to vaccine supply and the resumption of economic activities.

However, ranking officials in the Fed on the same day suggested the view that inflation could last longer than projected. Considering that the projected economic growth rate hits 7 percent and that inflation far exceeds the Fed’s target of 2 percent, the interest rate will need to be raised around the second half of next year, according to Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta.


Jae-Dong Yu jarrett@donga.com