Yellen, Powell: Higher Inflation on the Way

Two of the Biden administration’s top finance officials are warning that inflation is on the rise and is likely to linger, which could have an impact on the cost of both houses and the mortgages needed to buy them.

During testimony before the Senate Banking Committee, Treasury Secretary Janet Yellen acknowledged that inflation is rising twice as fast as the 2% she had predicted. “Probably closer to 4% and that already almost must be the case based on what’s happened this year,” she told Sen. John Kennedy (R-La.)

“Inflation is elevated and will likely remain so in coming months before moderating,” Fed Chairman Jerome Powell said in his opening statement. When asked if the inflation problem is more significant than he previously thought, Powell acknowledged, “I think it’s fair to say that it is,” adding the supply-chain issues contributing to the problem “have not only not gotten better—they’ve actually gotten worse.”

Yellen also urged Congress to take aggressive action to raise the debt ceiling, predicting catastrophe should they fail. One of the potential consequences, she said, was that interest rates on credit cards, car loans and mortgages would rise, making payments more costly.

Though still near historic lows, interest rates have begun to tick higher in recent days.