Yellen says US unlikely to see 'stagflation'
The United States is not expected to see stagflation, Treasury Secretary Janet Yellen said in an interview broadcast on Wednesday, adding that most forecasters expect inflation to cool as housing costs move lower. "In many parts of the country, rental prices for new apartments have actually declined overall," Yellen told Fox Business in an interview. Her comments came after JPMorgan Chase CEO Jamie Dimon recently refused to rule out the chance of stagflation, a situation where economic stagnation meets rising costs. Housing costs are the single biggest contributor to inflation, Yellen told Fox Business while on a trip to Kentucky to highlight President Joe Biden's efforts to boost economic growth. While it takes time for changes to filter into inflation measures, she stressed that she has "every expectation" housing costs will move down this year, easing price pressures. When asked, she also said she regretted previously saying that inflation was "transitory," given it has taken more than a few weeks or months for price increases to cool. Consumer inflation has fallen from a peak in 2022 but accelerated unexpectedly in February to 3.2 percent, underscoring the bumpy path to bringing prices lower. Although some consumers are spending more on credit cards, having depleted a portion of savings, Yellen said she sees this as "normalisation rather than a disturbing new trend." On the dollar's reserve currency status, Yellen said: "There really is no rival in terms of the depth of US financial markets, the liquidity of US Treasuries, the institutional and legal structure underpinning the use of the dollar." In Kentucky, Yellen is expected to turn the spotlight on how investments in sectors like clean vehicles, solar and batteries are bringing more funds to rural communities and those needing them. (AFP)