Yellen: Fed, in Powell’s Second Term, Must Ensure Inflation Doesn’t Become Endemic

During a second term of Jerome Powell as president of the Federal Reserve (Fed) from USA, the central bank will have an important role to play in the long term to ensure that inflation does not become endemic, the Treasury secretary told CNBC, Janet Yellen.

Yellen said she believed Powell’s nominations and Lael Brainard’s nominations for vice president would garner broad support in Congress and that she was confident in their ability to “make good judgments” to balance the Fed’s mandates to maintain maximum employment and stability. of prices.

“I think we have to worry about inflation. It has reached the levels that concern most Americans who see it and their pocketbook when they go to the grocery store to buy food or fill their car pools, “said Yellen, who chaired the Fed from 2014 to 2018.

He added that he believes it is due to an imbalance between supply and demand and economic bottlenecks that must be resolved, and expressed his confidence that the increase in prices will decrease.

“In the long term, the Fed has an important role to play in making sure this doesn’t become endemic. And I know he can be counted on to do it, ”he said of Powell.

The US economy is experiencing a streak of accelerated growth that will continue into next year and it is up to the Fed to determine how much monetary support is needed, given falling unemployment, the accumulation of household savings and other factors, Yellen said.

“What we do see in the market, with a strong dollar and generally low long-term interest rates, is confidence that inflation is not something that becomes long-lasting or endemic to the US economy, and that is important. ”.