Dec 11 (Reuters) – U.S. Treasury Secretary Janet Yellen on Sunday forecast a significant reduction in U.S. inflation in 2023, barring an unexpected shock.
“I think by the end of next year you will see much lower inflation if there is not … an unexpected shock,”[ads1]; she told CBS’ ’60 Minutes’ in an interview published Sunday.
Asked about the likelihood of a recession, the former central bank governor said: “There is a risk of a recession. But … it is certainly not, in my view, something that is necessary to bring down inflation.”
Yellen’s comment came days before the Fed is expected to slow the aggressive pace of rate hikes it has pursued this year. Fed Chairman Jerome Powell has telegraphed a smaller, half-percentage-point increase in the key rate, to a range of 4.25%-4.5%, after four 75-basis-point hikes this year.
Yellen told CBS that economic growth slowed significantly, inflation eased and she remained hopeful that the labor market would remain healthy.
She said she hoped the rise in inflation this year would be short-lived, saying the US government had learned “many lessons” about the need to curb inflation after high prices in the 1970s.
Shipping costs had fallen and long delivery delays had eased, while petrol prices at the pump were “way down”.
“I think we will see a significant reduction in inflation in the coming year,” she said.
Reporting by Costas Pitas and Andrea Shalal; Editing by Daniel Wallis and Kenneth Maxwell
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