US Treasury Sec. Yellen: Cause of this inflation is the pandemic

In a weekend interview with CBS, US Treasury Secretary Janet Yellen made some comments on the US inflation and its linkages with the COVID-19, per Bloomberg. White House economic adviser Brian Deese also appeared on the Sunday morning talk show and argued it would have the opposite impact by lowering the cost of child care, health care and housing, Bloomberg said.

Key quotes

It’s important to realize that the cause of this inflation is the pandemic.

If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.

When labor supply normalizes and the pattern of demand normalizes, I would expect that, if we’re successful with the pandemic, to be sometime in the second half of next year, I would expect prices to go back to normal.

Market reaction

Given the early hours of the Asian session, markets are yet to respond to the key comments. However, considering the absence of any strong moves, the US dollar may keep its upside momentum and test the Antipodeans due to the news.

Read: Fading US consumer confidence intensifies the Fed’s inflation dilemma