In an interview with CNBC on Thursday, Yellen said she believes the surge in inflation will continue for several more months, while expecting inflation to be under control and interest rates to remain at moderate levels.
Yellen said that inflation should be temporary and that inflation expectations still appear to be under control, but that they need to be watched very closely. She wants to ensure that inflation remains under control and is expected to subside in the medium term.
When asked about the risk of a new variant of the new coronavirus, Yellen said there was a risk of another economic shutdown and stressed the importance of increasing vaccinations. Yellen said there has to be concern about a new crown outbreak in parts of the U.S. and the possibility of a U.S. shutdown due to the outbreak. She still expects the U.S. to achieve full employment in 2022.
On the issue of U.S. Treasury yields, Yellen believes that the decline in U.S. bond yields indicate that inflation is still under control, and low yields also reflect the outlook for interest rates will remain at “moderate” levels.
On the U.S. housing market, Yellen expressed concern about the housing affordability of the public. She said the U.S. housing market will not be a crisis like the one in 2008. Yellen said.
“We’ve seen home prices rise sharply, partly because of the change in the epidemic and the low interest rate environment we’re in. However, this time a lot of these are borrowers with good credit, so I don’t think there will be a crisis like there was in 2008.”
Yellen is optimistic about moving forward with a global corporate tax, and she sees great hope that countries that oppose a global corporate tax will join the agreement. She also mentioned that the tax rate gap between the U.S. and foreign countries would narrow under the proposed tax reform. She is not sure if the global tax deal will cover Amazon.com.
Commenting on the Federal Reserve, she said the Fed is doing a good job, but she declined to comment on Fed Chairman Powell.
Yellen said the question of whether to nominate Fed Chairman Powell for a second term was a conversation between her and Biden, declining to comment in a television interview. She said.
“That’s a discussion I’m going to have with the president. The Fed is doing a good job.”