US Treasury Secretary Janet Yellen predicted that inflation will end once there is a “successful” response to the pandemic when demand patterns and labor supply return to their pre-pandemic norms.
In an interview with CBS’s “Face the Nation” that aired on Sunday, Yellen said she is confident that price spikes will subside in the second half of next year as the country slowly recovers from the virus that caused unemployment to soar to nearly 15 percent.
“The pandemic has been calling the shots for the economy and for inflation, and if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do,” she said.
The pandemic has fueled demand for products, creating supply-chain bottlenecks, Yellen said, while industries like restaurants and tourism have lagged.
“When the economy recovers enough from COVID demand patterns, people go back to eating out, traveling more, spending more on services and demand for products and goods begins to go back to normal,” she said.
Yellen added the supply of labor has also been impacted by the pandemic, saying that “participation is down, it hasn’t recovered.”
“When labor supply normalizes and the pattern of demand normalizes, and I would expect that if we’re successful with the pandemic to be sometime in the second half of next year, I would expect prices to go back to normal.”