“I believe by the end of next year, you will see much lower inflation if there’s not … an unanticipated shock,” she told CBS’s 60 Minutes on Sunday.
Asked about the likelihood of a recession, the former Federal Reserve chairwoman said: “There’s a risk of a recession. But … it certainly isn’t, in my view, something that is necessary to bring inflation down.”
Ms Yellen’s comments came days before the Fed is expected to slow the aggressive pace of interest rate increases it has pursued this year.
Fed Chairman Jerome Powell has telegraphed a smaller, half-of-a-percentage point increase in the policy rate, to a range of 4.25 per cent to 4.5 per cent, after four 75-basis point increases this year.
Ms Yellen told CBS that economic growth was slowing substantially, inflation was easing and she remained hopeful that the labour market would remain healthy.
She said she hoped the spike in inflation seen this year would be short lived, and said the US government had learnt “a lot of lessons” about the need to curtail inflation after high prices seen in the 1970s.
Shipping costs have come down and long delivery lags have eased, while petrol prices are “way down”.
“I think we’ll see a substantial reduction in inflation in the year ahead,” she said.