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The government believes inflation will ease over the next two years with a strong labor market. Treasury Secretary Janet Yellen says the economy is slowing, which she says will continue to lower inflation.

The secretary also noted that consumer spending is growing while the economy slows down. She also described the labor market as healthy with significant wage gains.

Yellin said she believes that the debt ceiling deal with its $1 trillion deficit over the next decade would help bring down inflation but warned there would be some difficulties ahead. Specifically, she says banks will struggle with commercial real estate under the higher interest rates and a declining need for office space.

However, she thinks most banks have enough liquidity to handle the strain.