Janet Yellen warns inflation decline might not be ‘smooth’

Exclusive: Treasury Secretary Janet Yellen said Wednesday that it could be extremely difficult for inflation to return to normal, after a series of reports showed price pressures in the U.S. economy had picked up at the start of the year.

In a sit-down interview with FOX Business’ Edward Lawrence, Yellen pushed back against stagflation concerns and insisted that inflation has not stalled.

“We don’t expect this to go smoothly from month to month, but the trend is clearly positive,” she said. “That said, President Biden’s top priority is to address the high cost issues that many Americans are concerned about.”

Prices for everything from groceries to new cars to health insurance soared in 2021 and 2022 due in part to disruptions to global supply chains caused by the pandemic, an extremely tight labor market, and, in part, This was the result of rampant inflation caused by increased consumer demand. Stimulating cash.

Inflation has fallen significantly from its peak of 9.1% in June 2022, but remains above the Federal Reserve’s 2% target. And just before that, compared to January 2021, the inflation crisis has begunthe price increased by a whopping 18.49%.

caused by high inflation severe financial pressure Most American households are being forced to pay more for everyday necessities like food and rent. The burden falls disproportionately on low-income Americans, whose already maxed-out paychecks are heavily affected by price fluctuations.

People shop at a hardware store in Brooklyn, New York City, January 25, 2024. ((Photo by Spencer Pratt/Getty Images)/Getty Images)

The consumer price index has hovered above 3% for the past nine months, and inflation has been roughly flat since June, raising concerns on Wall Street about the possibility of “stagflation.” Stagflation is a combination of economic stagnation and high inflation, characterized by soaring consumer prices and high unemployment.

Concerns about stagflation grew in 2022 as the Federal Reserve began aggressive rate hikes to curb rampant inflation, but last year there were signs that price pressures would subside without significantly hurting economic growth. Most of those concerns have disappeared.

There have been some recent signs that inflation may prove to be stronger than expected, but Yellen pushed back on those concerns.

“I don’t think there will be stagflation,” she said. “Most forecasters believe that inflation is on a downward trajectory over time.”

This is a developing story. Please check back for the latest information.