U.S. Treasury Secretary Janet Yellen on Friday said she still sees inflation as a temporary result of severe supply chain bottlenecks, and expects price increases to normalize during 2022 as people get back to work and demand shifts back to services.
“As demand shifts back to services and supply has a chance to adjust, I believe that price increases will normalize and we’ll see lower monthly inflation rates, I think, by the second half of (2022),” Yellen told CNN in an interview in Rome.
Yellen, who will attend a meeting of Group of 20 finance and health ministers on Friday, said inflationary pressures had been fueled by shortages of semiconductors and a rise in energy prices, but energy prices would begin to moderate in the months ahead.
She noted that people were more confident about the job market, and income levels were going up, especially for workers in the service sector.
Speaking in a separate interview with CNBC, she said two major spending bills working their way through Congress would also help reduce inflationary pressures by reducing the cost of medical services.
Yellen told CNBC she expected U.S. gross domestic product growth to pick up and unemployment to fall further as the pandemic eased and people returned to work.