Treasury Secretary Janet Yellen and top officials at the Federal Reserve are acknowledging that the country’s soaring inflation is unlikely to go away anytime soon.
Yellen, who formerly led the central bank, said Sunday that “unacceptably high” inflation will permeate the economy for at least the rest of the year, a prospect that hurts Democrats’ chances of retaining control over the House and Senate.
Top officials at the Fed are also warning consumers to be prepared to feel the sting of inflation for months to come. Mester isn’t the only Fed official cautioning about the stickier-than-anticipated inflation. Federal Reserve Bank of St. Louis President James Bullard recently said the high prices, and the Fed’s inability to drive inflation down thus far, are hurting the central bank’s reputation.
As of its meeting last week, Fed officials expect inflation, gauged by the Fed’s preferred personal consumption expenditures price index, to remain elevated at 5.2% by the end of the year — nearly a percentage point higher than it projected in March. Inflation will remain higher than wanted in 2023, ending the year up 2.7%, according to the projections.
Many economists also blame excessive government spending during the first year of President Joe Biden’s term as another major factor behind the high inflation. Republicans have used it as a cudgel against the administration and congressional Democrats. Meanwhile, Biden and Democrats are pushing their own narrative about inflation, focusing on externalities from Russia’s war in Ukraine and global supply chain troubles that are largely out of the control of Congress and the president.
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