Yellen: "Inflation Will Decrease by End of Next Year... Ukraine Support Needed Until Then" (Summary)

[Asia Economy Reporter Jeong Hyunjin] Janet Yellen, U.S. Treasury Secretary, forecasted that the inflation, which has surged to the highest level in over 40 years, is likely to ease considerably by the end of next year. Regarding Ukraine, which is confronting Russia, she expressed the U.S. intention to provide support as much as necessary.

In an interview with CBS on the 11th (local time), Secretary Yellen said, "Inflation will decrease significantly next year," adding, "If there are no unexpected shocks, inflation will be much lower by the end of next year."

Janet Yellen, U.S. Secretary of the Treasury
[Photo by Reuters]

Regarding the economic outlook for next year, Secretary Yellen said, "I hope the labor market remains very healthy so that people can be satisfied with their personal economic situations." She also assessed that major factors causing inflation, such as logistics costs and energy prices like gasoline, are gradually being resolved.

In fact, the U.S. Consumer Price Index (CPI) inflation rate for October rose 7.7% year-on-year, below the market forecast of 7.9%. This was the lowest since January (7.5%). The November CPI, to be announced on the 13th, is expected by the market to rise 7.3% year-on-year, continuing the slowdown in the rate of increase.

Regarding the possibility of a recession, Secretary Yellen said, "Concerns about a recession always exist, and the U.S. economy remains vulnerable to shocks," but she evaluated that the U.S. banking system, households, and businesses are currently sound. She added, "Economic growth is slowing considerably," and "There is a risk of recession, but I do not believe a recession is necessarily needed to curb inflation."

She further explained, "The U.S. is at or beyond full employment," and "Therefore, the rapid growth needed to bring people back to work after the COVID-19 outbreak is no longer necessary."

Regarding the war in Ukraine, when asked how long the U.S. can continue economic support, Secretary Yellen expressed the intention to continue support as much as possible. She also evaluated the European Union's implementation of a price cap on Russian crude oil on the 5th, joined by the Group of Seven (G7) and Australia, saying, "So far, I would say it is very good."

The U.S. has pledged $38 billion (about 50 trillion won) in military aid to Ukraine and has already provided $13 billion in direct aid to date.