“I think I was wrong about the way inflation would go,” Yellen told CNN’s Wolf Blitzer on The Situation Room when asked about his 2021 comments that inflation was only a “small risk.” .
Admission was the latest indication that the expectations of the administration of a normalizing economy were dashed by the continuing pandemic and the war in Europe.
“As I mentioned, there have been unexpected and big shocks to the economy that have pushed up energy and food prices and bottlenecks that have hit our economy hard that I didn’t understand – at the time, I didn’t understand it at all, but we recognize it now, “he said.
Yellen and other White House officials once framed inflation as a temporary side effect of the return to normalcy after the pandemic, pointing to supply chain inconveniences and demand exceeding supply.
However, months later, inflation is approaching a four-decade high.
Recent economic indicators have boosted optimism that inflation could have peaked in 40 years in March, although economists warn that it could be a considerable time before inflation returns to healthy levels. In response, the White House is launching a month-long effort to signal a major focus on the economy.
The push began Monday with an opinion piece by President Joe Biden published in The Wall Street Journal and continued Tuesday with an Oval Office meeting between Biden, Federal Reserve Chairman Jerome Powell and Yellen.
The Secretary of the Treasury said Biden had indicated at the meeting that he “shares the Fed’s priority of reducing inflation, and that he strongly believes in supporting the Fed’s independence in taking the necessary steps.”
The Fed, led by Powell, has been criticized for being slow to tackle high inflation, ending emergency support for the economy and starting rising interest rates. However, the Fed has pledged to raise interest rates rapidly and earlier this month raised interest rates by half a percentage point for the first time since 2000. The US central bank has noted new aggressive rate hikes in the coming months. Beyond Yellen, a number of other economic aids have flooded the cable news waves in hopes of driving the message that Biden is dedicated to lowering the prices of gasoline, food and housing, which it has caused a drop in their approval ratings.
The president, Yellen said Tuesday, knows “what a huge and enormous burden inflation is putting on American households.”
CNN’s Matt Egan contributed to this report.