Yellen Sees ‘Several More Months of Rapid Inflation’ — Worries About Housing Impact

Treasury Secretary Janet Yellen said Thursday on CNBC’s “Closing Bell” that the U.S. economy will have “several more months of rapid inflation.”

Yellen said, “We will have several more months of rapid inflation. So I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it. Measures of inflation expectations, I think, still look quite well contained over the medium term. Those expectations are actually a driver of price-setting behavior. So it is important that we monitor it carefully, but I believe fundamentally, you know, that this is something that will settle down.”

She continued, “We have seen a big increase in housing prices. In part due in part to changes in the pandemic and the low-interest-rate environment we have. The lending that’s taking place is to creditworthy borrowers. I don’t think that we’re seeing the same kinds of danger in this that we saw in the run-up to the financial crisis in 2008. It’s a very different phenomenon. I do worry about affordability and the pressures that higher housing prices will create for families that are first-time homebuyers or have less income. And a portion of the plans that will be under consideration by Congress will be intended to boost affordable housing, the supply of affordable housing.”

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