Janet Yellen, Treasury Secretary, said Tuesday that she had been wrong about the direction of inflation in the past. However, President Joe Biden stated that taming price rises is his top priority and he supports Federal Reserve's efforts to do so.
Yellen was asked by CNN whether it was wrong for her to downplay the threat of inflation in public statements made over the past year. She replied: "I think that I was wrong then regarding the path that inflation would follow."
"As I have mentioned, there were unanticipated large shocks to our economy that have boosted food and energy prices and supply bottlenecks which have affected our economy badly that we didn't at that time fully understand," Yellen stated. She added that these shocks range from Russia’s invasion of Ukraine to recent COVID-19 lockdowns within China.
"So, the shocks have continued to the economy, but inflation remains the number one concern of President Biden," Yellen stated.
Biden believes strongly in the Fed's independence to take the necessary steps to reduce inflation. Yellen stated that Biden is also supportive of this independence, and that unemployment was almost as low as it was since World War Two.
Later, a Treasury spokesperson stated that "The Secretary was pointing to inflationary pressures that couldn't be foreseen 18 month ago." This included Russia's invasion of Ukraine, multiple COVID variants, and lockdowns within China.
Biden had earlier met with Fed Chair Jerome Powell on Tuesday and stressed that he respects the independence Federal Reserve, a White House official stated.