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Citigroup CEO on inflation: 'We're probably in for a bit of a brutal winter'

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In a new interview with Yahoo Finance Editor-in-Chief Andy Serwer, Citigroup CEO Jane Fraser weighed in on supply chain disruptions and inflation. She predicts the "extraordinary disclocation" caused by COVID-19 will pass by 2022 — but not before we have a "brutal winter."

Video Transcript

JANE FRASER: Yeah, I mean, I think we've stopped hearing people saying transition or transitory because it's feeling a tad longer than that. However, if we look at the causes of it, they are ones that the world economy will work through. I mean, we did have an extraordinary dislocation in COVID, and I think pat on the back to the world economy about how incredibly it was responded to, both in terms of the regulators from the support given to the markets down to, you know, our clients around the world and, indeed, our people.

But it's going to take some time adjusting, and we don't go back to the way it was. We're going to a new normal as well. And I think the strength of the recovery in the first half of the year everywhere around the world was better than anyone expected, but the result of that is demand was very, very strong-- strong from consumers, strong from corporates. And our supply chains therefore has had some pretty severe dislocations from logistics all the way through consumer hoarding all the way through higher consumer demand to other dislocations in this in the both demand and supply of materials.

This too shall pass. It's going to pass probably in 2022, and we're probably in for a bit of a brutal winter, particularly in the energy markets where there's also some challenges there. But it's not long-term structural stuff that we won't adjust to.

I'm certainly more concerned that it could become more sustainable because inflation is sustained. It is unquestionable. I think the word someone used the other day that we're certainly having episodic inflation, unquestionably. The question is therefore does this become something more sustained? We won't know till next year.

I don't think it will become a big issue, but it certainly is something that's going to be choppy for the next while, and it won't be helped if the US debt-ceiling situation doesn't get resolved on a more timely basis before December.