U.S. Treasury Secretary Janet Yellen told Reuters on Saturday that new U.S. data showing inflation jumped unexpectedly in January signals that the fight against inflation “is not a straight line” and more work is needed.
In an interview with Reuters at a G20 finance leaders meeting in India, Yellen rejected arguments from some economists that a recession or significantly higher unemployment was needed for the Federal Reserve to win its inflation fight, sticking to her view that inflation still can be brought down while maintaining a strong labor market.
The strongest U.S. consumer spending data in nearly two years on Friday showed that the Fed’s preferred measure of inflation, the personal consumption expenditures price index (PCE), jumped unexpectedly in January, calling into question whether the Fed remains behind in its inflation fight.
Revisions to prior data showed that previous disinflation was milder than previously reported, and that data added to financial market fears that the Federal Reserve could continue raising interest rates into summer.
“I think this report showed that it’s not going to be a straight line – disinflation is not a straight line,” Yellen said, adding that inflation “remains a problem.”
“It’s one read, but core inflation still remains at a level that’s above what’s consistent with the Fed’s objective. So, there’s more work to be done,” Yellen added.
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