US Treasury Secretary Janet Yellen admitted on Tuesday that she was unable to predict how long inflation would continue to plague American consumers as the Biden administration works to contain rising prices amid political pressure. .
“I think I was wrong about the path inflation would take,” Yellen told Wolf Blitzergives CNN in “The Situation Room”when asked about her 2021 comments that inflation posed only a “small risk.”
The admission was the latest indication that the government’s expectations of a normalized economy have been ruined by the continuation of the pandemic and the war in Europe.
“As I mentioned, there were unforeseen and major shocks to the economy that pushed up energy, food prices and supply bottlenecks that severely affected our economy that I didn’t fully understand at the time, but we recognize that now,” she said.
Yellen and other White House officials had highlighted inflation as a temporary side effect of the economy returning to normal after the pandemic, pointing to problems in supply chains and demand outstripping supply.
However, months later, inflation is at its highest in nearly four decades.
Recent economic indicators have added to optimism that inflation may have reached a 40-year high in March, although economists warn that it could take considerable time before the economy returns to healthy levels.
In response, the White House is trying hard to signal that it remains focused on controlling inflation and restoring the American economy.
That effort can be seen on Monday (30), with an editorial by President Joe Biden published in The Wall Street Journal. Also, yesterday there was an Oval Office meeting between Biden, Federal Reserve Chairman Jerome Powell and Yellen.
The Treasury secretary said Biden had indicated at the meeting that he “shares the Fed’s priority of reducing inflation and that he strongly believes in its support of the entity’s independence to take necessary action.”
A Treasury spokesman said to 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 were shocks to the economy that exacerbated inflationary pressures that could not have been predicted 18 months ago, including Russia’s decision to invade Ukraine, several successive variants of Covid and lockdowns in China,” he said.
“As she also noted, there has been historic growth and record job creation and our objective now is to transition to stable growth as inflation slows.”
The Fed, led by Powell, was criticized for being slow to deal with high inflation, ending emergency support for the economy and initiating interest rate hikes.
However, the US central bank promised to quickly raise rates and earlier this month raised rates by half a percentage point for the first time since 2000.
The US central bank has signaled more aggressive rate hikes in the coming months.
In addition to Yellen, several other economic advisers have flooded the cable news airwaves in hopes of conveying the message that Biden is dedicated to lowering gas, food and housing prices as the current economic situation has led to a drop in his rates. of approval.
The president, Yellen said Tuesday, knows “what an important and enormous burden inflation is putting on American families.”
CNN’s MJ Lee and Matt Egan contributed to this story
Source: CNN Brasil
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