Treasury Secretary Janet Yellen said the outlook for inflation remains uncertain, while citing factors that could help it abate.
“Inflation has been very high, but many analysts think that it’s recently peaked and, at least on a year-over-year basis, is likely to come down,” Ms. Yellen said Tuesday during a hearing of the Senate Banking Committee.
Ms. Yellen said the Federal Reserve has begun to address inflation in a forceful way and that the Biden administration had been taking steps, such as working to address supply-chain bottlenecks, to try and ease inflation. She said a normalization of consumer spending patterns towards services and away from goods should also help to ease inflationary pressures.
Still, Ms. Yellen said supply disruptions continue, pointing to Russia’s invasion of Ukraine and recent Covid-19 outbreaks in China that have caused closures and lockdowns.
Economists surveyed by the Wall Street Journal estimate that prices as measured by the consumer-price index, which tracks what Americans are paying for everyday items, rose 8.1% in April from a year earlier. That would be a slowdown from the 8.5% rise in March, but still near the highest levels in roughly forty years.
Republicans have blamed President Biden and Democrats’ policies for helping fuel inflation. That includes passing a roughly $2 trillion pandemic-aid package last year in a party-line vote.
“These Democrat price hikes will likely be American families’ new normal at the checkout counter, a permanent, direct result of their failed policies,” Senate Minority Leader Mitch McConnell (R., Ky.) said Tuesday.
Democrats, including Ms. Yellen, have pushed back against those criticisms and defended the administration’s policies. Ms. Yellen has said that Democrats’ pandemic-aid package propelled a recovery in the labor market, insulated Americans from financial uncertainties posed by the pandemic and helped the U.S. economy avoid a prolonged downturn.