Yellen says she was “wrong” about the trajectory of inflation. Biden supports the Fed

US Treasury Secretary Janet Yellen testifies during the US House Committee on Financial Services hearing on the annual report of the Financial Stability Oversight Board, on Capitol Hill in Washington, DC, US May 12, 2022. Saul Loeb / Pool via REUTERS

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday she had been wrong in the past about the path inflation would take, but said that cooling price increases was President Joe Biden’s priority and that he supported Federal Reserve action to make it happen. which – which.

Asked in an interview with CNN whether she was wrong to downplay the threat that inflation has posed in public data over the past year, Yellen said, “I think I was wrong at the time about the course inflation would take.”

“As I mentioned, there were unexpected and significant shocks to the economy that boosted energy and food prices and supply bottlenecks that affected our economy badly that I didn’t fully understand at the time,” Yellen said, adding that shocks range from the Russian invasion of Ukraine to the recent COVID-19 lockdowns in China.

“Indeed, the shocks to the economy have continued, but inflation is President Biden’s number one concern,” Yellen said.

Yellen said Biden “strongly believes and supports the independence of the Fed to take the necessary steps” to bring down inflation, adding that the unemployment rate has also been about as low as it has been since World War II.

A Treasury spokesperson later said: “The Secretary was referring to shocks to the economy that have exacerbated inflationary pressures that could not have been foreseen 18 months ago, including Russia’s decision to invade Ukraine, several cascading variants of COVID, and Lockdowns in China”.

A White House official said Biden met earlier on Tuesday with Federal Reserve Chairman Jerome Powell and confirmed that he “respects the independence of the Fed.” Read more

Yellen said the Biden administration is taking action to try to complement the Fed’s efforts by lowering the cost of prescription drugs and health care and advancing proposals in Congress to boost the use of renewable energy.

While she said that the recent decline in core inflation data was encouraging, she indicated that oil prices remained high and that Europe was working on a plan to ban Russian oil imports.

“We can’t rule out more shocks,” Yellen said.

(Reporting by David Lauder and Costas Petsas) Editing by Leslie Adler and Sam Holmes

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