Yellen: Inflation Is ‘Temporary,’ It Will ‘Begin to Decline’ to ‘More Normal Level’ ‘By the Second Half’ of 2022

During an interview aired on Friday’s broadcast of CNN’s “Situation Room,” Treasury Secretary Janet Yellen said that she still thinks inflation is “temporary, although, I don’t mean just a matter of a month or two.” And “by the second half of the year, annual inflation rates will begin to decline toward their more normal level of around 2%.”

Yellen said, “I still would say it’s temporary, although, I don’t mean just a matter of a month or two. Although, monthly inflation rates are — have substantially declined from where they were just four or five months ago. But what we’re really seeing is the impact of the COVID pandemic has severely disrupted economic activity. It’s hugely boosted spending on products, on goods and diminished spending on services. It’s created an enormous demand for semiconductors and these supplies, although they’ve increased, are — have encountered bottlenecks and it’s really caused some inflationary increase in recent months. As people get back to work, as we defeat the pandemic, and as demand shifts back to services and as supply has a chance to adjust, I believe that price increases will normalize and we’ll see lower monthly inflation rates, I think, by the second half of the year, annual inflation rates will begin to decline toward their more normal level of around 2%.”

She added that while there will be “some continued shortages,” she thinks there will be a moderation of energy prices “in the months ahead.”

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