(Bloomberg) -- Treasury Secretary Janet Yellen said that inflation is on a path toward the Federal Reserve’s 2% target, and that she hopes the job market will stabilize as policymakers lower interest rates.
Asked Thursday in a CNBC interview whether she viewed US inflation as sufficiently under control, Yellen said “I do.” She said that she anticipates housing costs — the biggest component of cost increases for some time now — to come down, enabling 2% inflation.
There’s “a little bit more slack” now in the US job market, Yellen also said. That’s after the unemployment rate climbed above 4% this year and payroll gains slowed. Hopefully, the labor situation will stabilize as the Fed acts on the monetary-policy front, she said.
Yellen declined to comment on the pace at which interest rates should come down, while noting that Fed officials last week projected further cuts after their initial 50 basis-point reduction. It’s up to the Fed to decide, she said.
Asked about whether she monitors the US currency’s exchange rate, the Treasury chief said “of course I watch the value of the dollar.”
Dollar Policy
Yellen said that she laid out her dollar policy at the start of the Biden administration, stating that it’s up to markets to determine the value as officials pursued “a strong macroeconomic policy consistent with macroeconomic stability.”
“It’s been a long time since the United States has intervened in currency markets,” Yellen noted. She added that she could “imagine situations where markets are so disorderly, that intervention is called for, but as a normal matter, the dollar is determined by markets and interest rate differentials globally have been important drivers of that.”
Yellen also reiterated that it will be important over time for the US to shrink the fiscal deficit in order to keep the cost of servicing US debt “manageable.”
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