WASHINGTON (Reuters] – Although the economy experienced a shock contraction during the first quarter of the year, it is projected that growth will continue in this year’s U.S. Treasury chief economist on Monday. He also suggested that inflation could be at its peak.

In a statement made to the Treasury Borrowing Advisory Committee, Benjamin Harris, the assistant secretary to economic policy stated that private GDP projections could be revised downwards for 2.3% growth in the fourth quarter after the 1.4% decline in real GDP in the first quarter.

“Although this estimate may be revised down — and downside risks remain to the outlook — the U.S. economy is expected to continue its expansion this year,” Harris said. Harris stated that fiscal and monetary stimulation, along with recovery of labor supply, should balance the labor market and alleviate some inflationary pressures.

This statement was made as part of Treasury’s quarterly refunding process. On Monday, the Treasury stated that it expected to repay $26 billion of its debt during the second quarter. This is in contrast to January’s estimate of $66 Billion in net borrowing.

Harris claimed that, while there were lower exports and higher imports as well as low inventories investment, the decline in private consumption and fixed investments was caused by lower exports.

According to him, supply-demand imbalances had driven core and headline inflation higher in 2022. Further increases will be caused by increased energy prices and higher grain prices following Russia’s invasion.

Harris explained that “core inflation might have peaked in spring 2022 but started to ebb” due to further waning pandemics, efforts by the government to control energy prices and an easing supply problem in some markets.