No US Recession – Yellen says
Fabbro 6/25 (Rocio Fabbro, Journalist based in New York City, with bylines at The Messenger, Foreign Policy, CNBC, Salon.com and V Magazine. Graduated Summa Cum Laude from NYU’s College of Arts & Science with a Bachelor of Arts in Journalism and International Relations, and a minor in French Studies. “Janet Yellen says inflation will return to normal without a recession,” 6/25/2024. Accessed 6/29/2024 https://qz.com/economy-recession-inflation-interest-rates-janet-yellen-1851558770) IL TG
Treasury Secretary Janet Yellen thinks the Federal Reserve could hit its 2% inflation target in 2025, with a soft landing well in her sights.
Yellen told Yahoo Finance in an interview published Monday that she does “not see the basis” for a U.S. recession, pointing to the Fed’s caution around cutting interest rates too soon to avoid tipping the economy into the red as “the balancing act that they have.”
The Fed has continued to hold rates at a 23-year-high between 5.25% and 5.5% since last July, and has exercised restraint in lowering the benchmark federal funds rate following hotter-than-expected inflation readings in the first quarter of 2024. The central bank has taken a slow and steady approach to interest rates decisions, as it closely watches and waits for consistently positive economic data.
While annual inflation has slowed to 3.3%, it has remained well above the Fed’s 2% target. Following the June Federal Open Market Committee (FOMC) meeting, officials raised their inflation projections from earlier estimates. They now anticipate core prices to increase 2.8% in the fourth quarter from a year earlier, before slowing to 2.3% next year, and finally hitting the 2% target in 2026.
But Yellen sees prices normalizing faster than the Fed is projecting.
“I do expect inflation to come down, and as we get into next year I believe that inflation will go back to the Fed’s 2% target,” she told Yahoo Finance.