2/2 © Reuters. ARCHIVE PHOTO: U.S. Treasury Secretary Janet Yellen looks at a hearing before the U.S. House Financial Services Committee on the Annual Report of the Financial Stability Oversight Board at Capitol Hill in Washington , DC, USA, May 12, 2022. Graeme Jennings /
2/2
By David Lawder and Andrea Shalal
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expects inflation to stay high and that the Biden administration is likely to increase its inflation forecast by 4.7% for this year in its budget proposal.
During a Senate Finance Committee hearing, Yellen said the United States was facing “unacceptable levels of inflation,” but hoped that price hikes would soon begin to slow.
U.S. Consumer Price Index inflation has stayed above 8% in recent months, the highest readings in more than 40 years and well above President Joe’s administration forecast Biden for its fiscal budget 2023.
But another metric, the basic price index of personal consumption expenditure, excluding volatile food and energy costs, has begun to cool, dropping to 4.9% in April.
“I expect inflation to stay high, although I really expect it to go down now,” he said.
Yellen has repeatedly denied Republican claims that inflation was fueled by Biden’s $ 1.9 trillion US Rescue Plan (ARP) spending legislation COVID-19 last year.
“We’re seeing high inflation in almost every developed country in the world. And they have very different fiscal policies,” Yellen said. “Therefore, most of the inflation we are experiencing may not reflect the impact of the ARP.”
The Biden administration is still pushing for a reduced version of its stagnant social and climate spending agenda, which would offer tax credits for clean energy technologies and reform the prices of prescription drugs, policies that Yellen argued would help to reduce the spending of price-weary American consumers. excursions.
Yellen reiterated his view that inflation was fueled by high energy and food prices caused by the Russian war in Ukraine, a change in the purchase of goods during the pandemic, and new variants of COVID-19 and persistent supply chain disruptions.
ERROR WORD ‘TRANSITORY’
Yellen has been criticized by Republicans after acknowledging that last year he was wrong to predict that inflation would be transitory and would fall rapidly. He will face more difficult questions on the issue at a House Media and Routes Committee hearing on Wednesday.
Yellen added that both she and Federal Reserve Chairman Jerome Powell “probably could have used a better term than a transitory one” to describe inflation that they thought would fade quickly.
“When I said inflation would be transitory, what I didn’t anticipate was a scenario where we would end up facing multiple variants of COVID that would be upsetting our economy and global supply chains, and I wasn’t imagining impacts on food and the energy prices we have seen since the Russian invasion of Ukraine, “Yellen said.
He said the World Bank warned on Tuesday of a higher risk of “staggering” – the combination of weak growth and high inflation in the 1970s – that it was returning as it cut its global growth forecast by almost a third to 2.9% for 2022.