U.S. Treasury Secretary Janet Yellen predicts that inflation in the U.S. will decrease significantly in 2023 as long as there are no unanticipated economic shocks.
"I believe inflation will be lower," Yellen said Sunday during a CBS News 60 Minutes interview. "I am very hopeful that the labor market will remain quite healthy so that people can feel good about their finances and their personal economic situation."
Yellen's forecast comes after the U.S. spent the last year battling the worst inflation in forty years. The Federal Reserve took an aggressive approach to try to lower inflation, raising interest rates by three-quarters of a percentage point four times in a row. The pace of these significant increases has stirred concerns that the hikes could push the economy into a recession, but the Fed is expected to slow down soon. Fed Chair Jerome Powell recently announced the central bank intends to continue to raise interest rates to stave off inflation but will likely be making much smaller hikes closer to a half of a percentage point.
Yellen told interviewers that she saw positive signs that some of the underlying causes of the price inflation are improving, including lower shipping costs, shortened delivery lags, and gas prices going "way down." When asked if families should worry about a recession, Yellen said the economy remains prone to shocks but that the banking system, business, and household sectors are healthy.
"There's a risk of a recession. But it certainly isn't, in my view, something that is necessary to bring inflation down," Yellen posited.