Yellen Sees Inflation In Line With Fed’s Goal by End of Year
Treasury Secretary Janet Yellen said that by the end of this year, monthly price changes will be running at a level consistent with the Federal Reserve’s target, even if year-over-year numbers continue to show uncomfortably high inflation.
Inflation as measured on an annual basis will be elevated “for some time,” Yellen told reporters in Atlanta Wednesday following several local meetings and events. “But my expectation is that by the end of the year that monthly rates will come down to a pace consistent with the Fed’s interpretation of price stability.”
Yellen’s comments imply a return to monthly readings of 0.1% or 0.2% by December. The Fed targets 2% average inflation over time based on the Commerce Department’s personal consumption expenditures price index. That gauge rose 4% in June from a year earlier, the fastest pace since 2008.
Yellen reiterated the Biden administration’s view that the inflation surge reflects bottlenecks in the economy and challenges associated with reopening. “I believe it is temporary and inflation will recede to normal levels in the not-too-distant future,” she said.
The Treasury secretary said the agency was working with state and local governments, providing technical assistance as needed, to try to speed up states’ sluggish efforts to get billions of rental assistance out.
“We try to do everything we can to simplify the paperwork and procedures so it’s easier for state and local governments to get these programs running and for individuals to be able to qualify for it,” Yellen said.
“This is a completely new infrastructure,” she added. “The delays partly reflect the difficulties they are having in starting up something new.”
State and local governments nationally have disbursed less than 10% of the $47 billion in federal rent aid in the pipeline. The Centers for Disease Control and Prevention extended a ban on evictions in areas of the country with substantial and high transmission of coronavirus on Tuesday.
Asked if the Biden administration wanted Congress to act on an evictions ban, Yellen didn’t answer directly but suggested the CDC order would be enough. “I think the fact that the CDC has acted is important,” she said.
Yellen’s visit to Atlanta was part of an effort to promote the Biden administration’s spending plans and included a private meeting with executives, including those from Delta Air Lines Inc. and Coca-Cola Co., and public discussions with Latin American small-business owners.
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