US Treasury Secretary Janet Yellen said on Thursday she was confident the Federal Reserve and the Biden administration would take steps needed to bring down inflation over the course of 2022, provided the COVID-19 pandemic is brought under control.
“Inflation rose by more than most economists, including me, expected and of course it’s our responsibility with the Fed to address that. And we will,” Yellen told CNBC in a live interview.
“We have been hit by a pandemic that has created economic challenges that none of us anticipated, and it is our hope and intention to bring inflation down to levels that are consistent with the Fed’s interpretation of price stability,” Yellen said.
The Treasury chief and former Fed chair said that U.S. household finances were in good shape, with some families better than before the pandemic, and built-up savings should help sustain the economy for years to come, even with less fiscal support going forward.
Meanwhile, she said it was critical for more people to come back into the labor force, which would help ease supply pressures. This will require the pandemic to be brought under control. If that happens, she said she expects inflation pressures to ease throughout 2022.
Yellen also told CNBC that she views Biden’s proposed Build Back Better social and climate legislation as encouraging more workforce participation through its child care and early childhood education provisions.