U.S. Secretary of Treasury Janet Yellen offered a new timeline for Americans grappling with inflation, suggesting that the Federal Reserve will come near its target of 2 percent by the end of 2024.
In a live interview on Wednesday which preceded the Federal Reserve's decision to hold interest rates steady, Yellen reiterated her confidence in the U.S. economy's path to achieving a "soft landing," despite global uncertainties.
"My expectation is that inflation will continue to come down, and I would frankly expect, by the end of 2024, 2 is certainly likely to be the first numeral," Yellen said in the interview.
Her comments came just before the Fed's announcement to keep its benchmark borrowing rate between 5.25 percent and 5.5 percent, providing stability for economic forecasters.
"I always felt there's a path by which the economy could achieve a soft landing," Yellen reflected, acknowledging the economy's surprising strength in 2023 which defied predictions of a recession.
"What I thought was that there were major disturbances in many product markets because of the pandemic and supply chain issues connected with it," the Secretary said, adding that the "labor market also experienced a severe shock with an unprecedented number of people losing jobs."
Newsweek has reached out to the U.S. Department of Treasury for comment via email.
Inflation Eased To 3.1 Percent
With pandemic-era supply chain and labor market issues in the rearview, inflation rates have eased to 3.1 percent this month and the economy is demonstrating resilience, Yellen said. Fed Chair Jerome Powell's committee outlook on Wednesday included three potential rate reductions in 2024 and more in following years.
While addressing the Fed decision, Powell said that the "policy rate is likely at or near its peak for this tightening cycle," following a series of 11 rate hikes that lifted the federal funds rate to its highest point in over two decades.
Yellen, who is a former Fed chair, also pointed out the political impact of inflation on President Joe Biden's administration and the public sentiment towards the economy. She noted that increasing consumer confidence and declining gasoline prices are signaling an economic upturn.
"Gradually over time, I think people will feel better about the economy," she said, adding that while big expenses like rental costs are still high, other "important prices" are coming back to pre-pandemic levels.
Her outlook gives Americans a clearer sense of when they might expect relief from the high cost of living, as the Fed charts a course for the long-term stabilization of prices.
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
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