​​Yellen says she was ‘wrong’ about ‘path that inflation would take’

Treasury Secretary Janet Yellen acknowledged in an interview on Tuesday that she was “wrong” about “the path that inflation would take,” as the lagging COVID-19 pandemic and Russian invasion in Ukraine have kept prices persistently high.

During an interview with CNN’s Wolf Blitzer, the network played a clip of previous comments she made in 2021, in which she said inflation would be a “small risk” and added that she didn’t “anticipate that inflation is going to be a problem.”

“Well, look, I think I was wrong then about the path that inflation would take,” the Treasury secretary said when asked about her previous comments. “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 didn’t — at the time didn’t fully understand. But we recognize that now.”

“The Federal Reserve is taking the steps that it needs to take. It’s up to them to decide what to do. And, for our part, President Biden is focused on supplementing what the Fed does with actions we can take to lower the cost that Americans face for important expenditures they have in their budgets,” she added.

The interview came as Yellen met earlier on Tuesday with President Biden, Federal Reserve Chairman Jerome Powell and National Economic Council Director Brian Deese as the Biden administration navigates persistent inflation. 

Powell and Yellen acknowledged in December that they had underestimated how long inflation would last or how high it would rise as the COVID-19 pandemic disrupted supply chains, further set off by the Russian invasion, and coronavirus relief injected more money into the pockets of consumers.

In an interview with CNBC in March, Yellen predicted “we’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”