“I think I was wrong then about the path that inflation would take,” Yellen told CNN’s Wolf Blitzer on “The Situation Room” when asked about her comments from 2021 that inflation posed only a “small risk.”
“As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I did not – at the time – did not fully understand, but we recognize that now, “she said.
Yellen and other White House officials once framed inflation as a temporary side effect of the economy returning to normal following the pandemic, pointing to snags in supply chains and demand outstripping supply.
Yet months later, inflation is running at a near-four-decade high.
Recent economic indicators have raised optimism that inflation may have peaked at 40-year highs in March, although economists warn it could take considerable time before inflation returns to healthy levels. In response, the White House is launching a month long effort to signal a heavy focus on the economy.
The Treasury secretary said that Biden had indicated in the meeting that he “shares the Fed’s priority in lowering inflation, and that he believes strongly in his support of the independence of the Fed to take the steps that are necessary.”
A Treasury spokesperson told CNN in a statement that Yellen’s comments were in the context of certain unforeseen events that ended up hitting the economy.
“The Secretary was pointing out that there have been shocks to the economy that have exacerbated inflationary pressures which could not have been foreseen 18 months ago, including Russia’s decision to invade Ukraine, multiple successive variants of COVID, and lockdowns in China,” the spokesperson said. “As she also noted, there has been historic growth and record job creation and our goal is now to transition to steady and stable growth as inflation is brought down.”
The President, Yellen said Tuesday, knows “what an important and huge burden of inflation is placing on American households.”
CNN’s MJ Lee and Matt Egan contributed to this report.