US Treasury Secretary Yellen stated during his visit that despite tight housing supply, basic inflationary pressures are still easing. She believes that inflation expectations have been controlled, and the labor market is strong but has not increased inflationary pressure. Although housing costs are progressing slowly, it is expected to decrease, which will help achieve the Federal Reserve's 2% inflation target.

Inflation and the Labor Market

Yellen recently stated in an interview in Sedona, Arizona that although the tight housing supply is hindering the decline in inflation, she believes that the basic pressure of inflation is easing. She emphasized that inflation expectations have been well controlled, and the strong labor market has not put significant pressure on inflation. Yellen pointed out that the average hourly wage in April increased by 0.2%, which, although only a data point, still shows alignment with the 2% inflation target.

Housing supply issues

Yellen acknowledges that the progress of housing inflation has been slower than expected, mainly due to supply issues. The housing problem in the United States is extremely serious, not only due to the huge shortage of affordable housing, but also due to the impact of high interest rates. However, based on the latest rental data analysis, she believes that housing costs are likely to decrease to adapt to the new rental market situation.