Treasury Secretary and former Fed Chair, Janet Yellen, has reversed course, saying that inflation will likely stay with the country for at least a few more months after previously saying it would likely subside quickly.
“We will have several more months of rapid inflation,” Yellen told Sara Eisen on CNBC. “So I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it.”
Treasury Secretary Janet Yellen told CNBC she expects “several more months of rapid inflation” before price pressures begin to subside. ” pic.twitter.com/pPLSmfEtkr
— datastocks (@Renepdata) July 16, 2021
Inflation has fast become the number one economic story after decades out of the limelight.
The rise has been so fast that even liberals are worried that prices are getting overdone after a record $1.9 trillion stimulus spending by the Democrats earlier this year.
“We knew that there was a possibility that this could lead to inflation…. I know it feels—I feel it,” said Democrat Rep. Kim Schrier (Wa.) who represents a swing-district. “We all feel it a little bit, that everything feels a little more expensive. On top of that, gas is more expensive.”
Last week the progressive website Vox said, “Everything feels more expensive because it is.”
Still the markets don’t seem to be too worried about inflation.
The bond market, which acts as a proxy for inflation has seen bond rates go lower from 1.75% in March to 1.32% this month.
Lower interest rates means that market watchers think that inflation is only temporary.
For months the Federal Reserve Bank, which sets interest rates for interbank lending, has said that while inflation remains a concern, it is likely “transitory.”
But some in Congress have worried that the Fed is badly behind the inflation curve.
“And since the Fed has proven unable to forecast the level of inflation, why should we be confident that the fed can forecast the duration of inflation?” asked Republican Senator Pat Toomey (PA) during a recent hearing with Fed Chair Jerome Powell.