WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Wednesday said she saw a consistent pattern of inflation falling over time and noted turbulence in the job market had really settled down.
“Inflation has come down meaningfully. We’re not all the way there. There’s further to go for the Fed to reach its 2% objective,” Yellen told CNBC in an interview, expressing confidence that inflation would be in the 2% range by the end of 2024. “We’re getting a lot closer.”
The U.S. November Consumer Price Index rose 3.1% on an annual basis.
Yellen repeated her view that the U.S. economy was heading for a soft landing and said she saw a reasonable chance that growth would continue in 2024. She said she did not view the risk of a recession as “particularly high.”
She said a recent survey showed an uptick in consumer confidence and that consumers were beginning to understand that inflation was coming down, with real earnings also going up.
“So gradually over time, I think people will feel better about the economy,” she said, although she said consumers were still conscious of higher prices for rents and other items.
On the bright side, rental costs had stopped going up and gasoline prices were down, Yellen said.
She said she expected the pace of consumer spending to slow somewhat to a “more normal level,” and growth was likely to remain solid although it was unlikely to reach the high level it hit in the third quarter.
Yellen, a former Fed chair, said she trusted the Federal Reserve to make monetary policy, but said it was “in a way natural” for interest rates to ease somewhat as inflation came down.
“They have two risks to manage. One is that inflation doesn’t come down back to their target as they envisioned, and the other is that the economy becomes too weak,” she said, adding, “I’m going to leave that call to them.”
(Reporting by Andrea Shalal, writing by David Ljunggren, Editing by Nick Zieminski)
By Andrea Shalal
