US Treasury Secretary John Yellen: inflation rate of about 3% may continue until the end of the year

Yellen, the US Treasury Secretary, said that the recent upward trend in prices will fade, while the US labor market has improved, but it still has a long way to go before it reaches the level of COVID-19. Speaking at a news conference in London after the G7 finance ministers’ meeting on Saturday, Yellen said:
“We see some inflation, but I don’t think it’s permanent. I believe we will see a higher inflation rate for the rest of the year – probably around 3%. ”
However, Yellen warned that officials are still closely watching the price rise.
“I don’t want to say that I’ve made up my mind. We will observe the situation very carefully, pay close attention to it and try to solve the problems that arise when they prove necessary. ”
Yellen believes President Biden’s $4 trillion spending plan is good for the United States, even if it could lead to higher inflation and eventually higher interest rates. Yellen said that raising interest rates is good for society and the Federal Reserve
“If we end up with slightly higher interest rates, it’s actually good for society and the Federal Reserve. Over the past decade, we have been fighting against low inflation and interest rates, and we want to return to a normal interest rate environment. If it helps alleviate some of the situation, it’s not a bad thing, it’s a good thing. ”
In recent months, the debate over inflation has intensified. People like Yellen believe that the current price rise is driven by abnormal conditions caused by the epidemic, such as supply chain bottlenecks and sharp spending when the economy reopens. However, some critics point out that trillions of dollars of government aid can lead to a sustained price surge.
U.S. consumer prices rose 4.2% in April from a year earlier, and may data will be released on Thursday.
“I personally think this represents temporary factors,” Yellen said, adding that policies should ignore these factors.
Yellen spoke after the G7 meeting, where policy makers reached an agreement to impose the world’s lowest tax rates on some of the most profitable companies. Yellen said:
“Some people are worried about fiscal sustainability and have expressed their willingness to start withdrawing loose policy when the economy is back on track. We think most countries have fiscal space. ”
Yellen said that although the economic recovery is taking root, millions of people in the United States are still unemployed during the epidemic and have not yet returned to the labor force.
“We should not expect this process to be completed in a month or two,” she said, but added that the US could return to full employment sometime next year.

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