Yellen says she was ‘wrong’ about the path of inflation; Biden endorses the Fed

US Treasury Secretary Janet Yellen testifies during a US House Financial Services Committee hearing on the Financial Stability Oversight Council’s Annual Report, on Capitol Hill in Washington, DC, USA. May 12, 2022. Saul Loeb/Pool via REUTERS

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WASHINGTON, May 31 (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 controlling price rises was the president’s top priority. Joe Biden and that he supports the actions of the Federal Reserve to achieve that.

Asked in a CNN interview if she was wrong to downplay the threat posed by inflation in public statements over the past year, Yellen said, “I think I was wrong then about the path inflation would take.”

“As I mentioned, there have been large, unforeseen shocks to the economy that have increased energy and food prices and supply bottlenecks that have severely affected our economy that I did not fully understand at the time,” Yellen said, and He added that the impacts range from the Russian invasion of Ukraine to the recent COVID-19 lockdowns in China.

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“So actually the shocks to the economy have continued, but inflation is the number one concern for President Biden,” Yellen said.

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

A Treasury spokesman later said: “The secretary noted that there have been 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, multiple successive variants of COVID and lockdowns. in China”.

Biden met with Fed Chairman Jerome Powell on Tuesday, stressing that he “respects the independence of the Federal Reserve,” a White House official said. read more

Yellen said the Biden administration was taking steps to try to complement the Fed’s effort by lowering the cost of prescription drugs and health care and pushing proposals in Congress to boost the use of renewable energy.

While he said the recent drop in core inflation data was encouraging, he noted that oil prices remained high and Europe was working on a plan to ban imports of Russian oil.

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

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Information from David Lawder and Costas Pitas; Edited by Leslie Adler and Sam Holmes

Our standards: the Thomson Reuters Trust Principles.

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