“I think I was wrong at the time about the course inflation would take,” Yellen told CNN’s “The Situation Room” when asked about her comments from 2021 that inflation presents only a “little risk.”
“As I mentioned, there have been unexpected and significant shocks to the economy that boosted energy and food prices and supply bottlenecks that have impacted our economy badly that I—at the time—didn’t quite understand, but we do now.”
At one point, Yellen and other White House officials coined inflation as a temporary side effect of the economy’s return to normal after the pandemic, citing bottlenecks in supply chains and outstripping demand over supply.
However, months later, inflation reached its highest level in nearly four decades.
Recent economic indicators have raised optimism that inflation may have peaked at a 40-year high in March, although economists warn that it may be a long time before inflation returns to healthy levels. In response, the White House is making a month-long effort to signal a major focus on the economy.
The Treasury secretary said Biden indicated at the meeting that he “shares the Fed’s priority in lowering inflation, and that he strongly believes in his support for the Fed’s independence in taking the necessary steps.”
Yellen said Tuesday that the president knows “what a huge and huge burden that inflation places on American families.”
CNN’s Matt Egan contributed to this report.