U.S. Treasury Secretary Janet Yellen on Thursday (20th) expressed solidarity with the economic achievements of the first year of the Biden administration, and expected that the inflation rate will fall to 2022. regarding 2%.
In an interview with CNBC, Yellen emphasized that the U.S. labor market has grown strongly in the past 12 months, adding more than 6 million jobs and the unemployment rate is below 4%. The U.S. government in early 2021 feared it would face the conditions of 2008, when it took nearly a decade to return to full employment.
Yellen sees this as the biggest drop in unemployment in U.S. history, a remarkable achievement. But she also acknowledged that the current economic landscape is not perfect, and painful inflation is causing some households to face crisis.
Yellen predicts that inflation will remain above 2% for most of this year, but if the epidemic is successfully controlled, inflation will gradually moderate this year and is expected to return to a normal level of around 2% by the end of the year. Inflation is surging at the fastest pace since 1982, with the consumer price index (CPI) rising at an annual rate of 7% in December due to supply chain bottlenecks and strong demand.
Yellen said the time has come for the Fed to recalibrate monetary policy to keep prices down. The bank’s task is to keep the inflation rate around 2% and has the right to raise interest rates to combat inflation. Recently, officials such as Powell have been sending hawkish signals to the outside world, predicting that interest rates will be raised soon.
Markets see an 88.2 percent chance of a quarter-point rate hike at the Fed’s March meeting, and a 5.2 percent chance of a 50-basis-point rate hike, according to the CME FedWatch tool.
The current high inflation situation is dragging down the legislative progress of Biden’s “Rebuild a Better Future Act”. Republicans are unanimously opposed to the case, arguing that it will make the current inflation worse, although the Democratic Party will adopt a settlement process to bypass the Republican Party and directly pass the law. , but moderates have also expressed concerns regarding inflation that have stalled the bill.
However, the Yellen and Biden administrations believe that the scale of 1.75 trillionDollarThe Social Welfare Act will help address supply chain issues and high inflation. As the bill has hit a wall, Biden has recently considered breaking up the bill and passing it in batches to resolve the current impasse.
