During an interview on CNBC’s Squawk Box last Wednesday, Treasury Secretary Janet Yellen said that the US should see continued progress on inflation during the next two years.
Yellen said for nearly a year she has been saying that there is a path to lowering inflation without hindering the strong job market and recent data over the last year suggests that the country is on the right path.
While pointing out that the labor market is remaining “quite strong,” Yellen also noted that there are “signs of easing pressures” that could be important in bringing down inflation.
Such signs included a slight rise in the “quit rate” and a decline in job openings. She said these signs suggest that firms are under less pressure to add to their workforce. Despite that, Yellen added, the labor market continues to remain “very strong” while inflation has fallen 4 percent from its peak last summer.
She predicted that there will continue to be “progress over the next two years.”
In discussing commercial real estate, Yellen said that with the “change in attitudes” toward remote working, the change in demand for office space, and the higher interest rates, some banks are likely preparing for difficulties and “some restructuring” moving forward.
She said “stress tests” of the country’s largest banks indicate that they have enough capital to deal with the current environment. She added that supervisors will also be “looking closely” at a range of banks to ensure that they too are “adequately prepared.”
Yellen said that the level of liquidity and capital in the US banking system remains strong, and while there could be “some pain,” US banks “should be able to handle the strain.”
Yellen added that “some banks are experiencing pressure on earnings” in this current environment leading to “a motivation” for “some consolidation.”
Read the transcript of the interview HERE.