Severe supply chain disruptions forebode a "brutal winter" for markets, which could suffer from heightened uncertainty if Congress fails to raise the debt ceiling well ahead of a December deadline, Citigroup (C) CEO Jane Fraser told Yahoo Finance at its All Markets Summit on Monday.
She expressed optimism that the supply-demand imbalance could pass next year, but acknowledged that disruptions "could become more sustainable."
"We're probably in for a bit of a brutal winter, particularly in the energy markets where there's also some challenges there," Fraser says. "But it's not long-term structural stuff that we won't adjust to."
"This too shall pass," she adds. "It's going to pass probably in 2022."
The remarks from Fraser echo recent sentiment from central bankers and other top CEOs, who've increasingly acknowledged that elevated prices will remain for the foreseeable future.
Speaking on a panel last month, leaders of the Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Japan said that supply chain bottlenecks could cause heightened inflation for a prolonged period. But they signaled that prices would likely come down as pandemic-related supply disruptions return to normal.
At the Milken Institute Global Conference last week, Secretary of Commerce Gina Raimondo echoed warnings of a persistent disruption, noting that the global chip shortage at the center of the supply chain bottleneck "is going to take a long time to fix."
The U.S. and Canada each recorded inflation last month not seen for more than a decade. The U.S. reported a 5.4% rise in consumer prices in September, which amounted to a 13-year high for the annual rate; meanwhile, Canada saw prices rise 4.4% in September compared to the same month a year prior, an 18-year high.
"The question is therefore does this become something more sustained?" Fraser says. "We won't know until 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," she adds.
When describing potential upcoming market headwinds, Fraser also pointed to the approaching December deadline for Congress to raise the U.S. debt ceiling.
Earlier this month, the Senate reached an agreement to raise the debt ceiling by $480 billion, which Treasury Secretary Janet Yellen said would allow the U.S. to pay its bills through Dec. 3.
During a visit to the White House on Oct. 6, a day before the Senate agreement, Fraser urged an end to the impasse because "we just cannot wait until the last minute to resolve this."
Speaking to Yahoo Finance, Fraser reiterated that call for a speedy resolution as the December deadline approaches. The move would prevent additional uncertainty amid an already murky near-term financial future with persistent inflation, she said.
"We've stopped hearing people saying 'transition' or 'transitory' because it's feeling a tad longer than that," she says.
"It won't be helped if the U.S. debt ceiling situation doesn't get resolved on a more timely basis before December," she adds.