Treasury Secretary Janet Yellen said on Sunday predicted a significant reduction in inflation by the end of 2023, while also noting the continued risk of a recession.
“I believe by the end of next year you will see much lower inflation if there’s not … an unanticipated shock,” Yellen told Norah O’Donnell during an interview that aired Sunday on CBS’ “60 Minutes.”
“I am very hopeful that the labor market will — remain quite healthy — so that people can feel good about their finances and their personal economic situation,” she added.
Yellen also said there was risk of an economic recession, though she noted how the country currently has a “healthy banking system” and a “healthy business and household sector.”
“There’s a risk of a recession,” Yellen added. “But it certainly isn’t, in my view, something that is necessary to bring inflation down.”
Yellen’s remarks come after the Producer Price Index (PPI), which measures the costs of products before they hit shelves, rose 7.4 percent last month, an 0.3 percent rise from the previous month.
The latest PPI year-to-year figure is down from 8 percent in October and from a high of 11.7 percent in March.
Federal Reserve Chair Jerome Powell said last month that the central bank will continue to raise interest rates, but at a slower rate, in an ongoing effort to fight inflation.
Yellen said economic growth is “slowing substantially” after a stretch of substantial growth after the worst of the COVID-19 pandemic.
“And businesses see that. Look, we had a very rapid recovery from the pandemic. Economic growth was very high. And there was a surge in hiring, put people back to work,” she said.
“We got people back to work. We closed that gap. We have a healthy labor market. To bring down inflation and because almost everybody who wants a job has a job, growth has to slow.”