By David Lawder
BENGALURU (Reuters) – U.S. Treasury Secretary Janet Yellen told Reuters on Saturday that new data showing the country’s inflation unexpectedly rose in January signaled the fight against inflation was not “a straight line” and that more work will be needed.
In an interview with Reuters at the G20 financial leaders meeting in India, Yellen rejected arguments by some economists that a recession or significantly higher unemployment would be necessary for the Federal Reserve to win the fight against inflation, maintaining her view of that inflation can be reduced, even maintaining a strong labor market.
The strongest U.S. consumer spending data in nearly two years showed on Friday that the Fed’s preferred measure of inflation, the personal consumption price index (PCE), unexpectedly jumped in January, raising questions whether the Fed continues to lag behind in its fight against inflation.
Revisions of past data showed that the previous deflation was milder than previously reported, and those data added to financial market fears that the Federal Reserve may continue raising interest rates well into the northern hemisphere summer.
“I think that report has shown that it’s not going to be a straight line – disinflation is not a straight line,” Yellen said, adding that inflation “remains an issue.”
“It’s a reading, but core inflation remains at a level that is above what is consistent with the Fed’s target. So there’s more work to be done,” added Yellen.
(Reporting by David Lawder)