Treasury Secretary Janet Yellen repeated her view that elevated U.S. inflation won’t persist beyond next year and said the Federal Reserve will act if needed to prevent a rerun of 1970s-style price rises.
“I’d expect price increases to level off, and we’ll go back to inflation that’s closer to the 2% that we consider normal” as the pandemic fades, Yellen said in an interview that aired Tuesday on National Public Radio’s “Marketplace” show.
The Treasury chief said that an end to the pandemic would allow more people to return to work, and with consumer demand returning to normal patterns, that will relieve pressure from wages and goods prices.
Yellen, who was chair of the Fed from 2014 to 2018, said the high inflation that persisted through parts of the 1970s and 1980s occurred “because people thought that policy makers wouldn’t bring it to an end, and inflation expectations became embedded in the American psyche.”
“That isn’t happening now and the Federal Reserve wouldn’t permit that to happen,” she said.
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