US Treasury: Inflation causing great economic insecurity in US
Janet Yellen, the Secretary of the US Treasury, said that she predicts inflation will come down next year.
Janet Yellen, the Secretary of the US Treasury, remarked that inflation at home is causing a great sense of economic insecurity and that she hopes it does not become endemic - despite that experts have been warning that inflation may become rooted in the US economy.
"I think inflation has been running at unacceptably high rates, it is a huge issue for every American household, it's leading to a great sense of economic insecurity for Americans, and we don't want to see it become endemic," Yellen said in an event hosted by The Atlantic.
Yellen said that she predicts inflation will come down next year, in addition to the country being vulnerable to supply chain shock which has come as a result of the war in Ukraine.
In addition, Yellen said the Federal Reserve may not meet its 2% target for inflation next year, despite the interest rate hikes that the Fed has been implementing.
"It may not happen by 2023 but I have full confidence in the Fed’s ability to bring it down," she said.
The Fed, to preserve public opinion, promised to ameliorate inflation - which is nearing 8% - back to its 2% goal.
On Wednesday, the Federal Reserve raised the federal funds rate by 75 base points to between 3% and 3.25%.
Nonetheless, the Fed’s measures have had little effect on inflation, as per a report by the Bureau of Labor Statistics' recent monthly Consumer Price Index (CPI), which remains at a 40-year high point, and a more substantial rate hike expectation by the central bank has kept Wall Street stocks down for weeks.
Despite the fact that higher interest rates are supposed to limit intra-bank loans and thus create new money, the Economic Policy Institute found in an April study that corporate profits accounted in the last two years for 54% of inflation in the US. This means that the problem is price speculation, not overeager lenders.
It is worth noting that the economic situation which is affecting the financial standpoints of American families and businesses is burdening US President Joe Biden's popularity, which will affect his chances of winning the midterm congressional elections which will take place in early November.
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