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Yellen: 'I was wrong' about inflation's path

Anna Golubova

Kitco News

(Kitco News) U.S. Treasury Secretary Janet Yellen admitted that she was "wrong" about where inflation was heading.

"I think I was wrong then about the path that inflation would take," Yellen told CNN Tuesday. "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 fully understand, but we recognize that now."

U.S. Treasury Secretary was replying to a question about downplaying inflation concerns throughout the past year.

Yellen was among key officials who maintained that inflation was transitory and a consequence of the world economy opening up following the COVID-19 pandemic.

"So really, the shocks to the economy have continued, but inflation is the number one concern for President Biden," Yellen said. "We can't rule out further shocks."

U.S. Treasury Secretary pointed to new shocks making inflation worse, including Russia's invasion of Ukraine and China's zero-COVID policy.

A Treasury spokesperson later clarified Yellen's comments, telling CNN that "there have been shocks to the economy that have exacerbated inflationary pressures which couldn't have been foreseen 18 months ago."

Yellen's comments came on the same day as U.S. President Joe Biden requested a meeting with Federal Reserve Chair Jerome Powell, which Yellen joined as well.

"I'm meeting with the Chairman today and with Secretary Yellen to discuss my top priority, and that is addressing inflation and — and the — in order to transition from a historic recovery to a steady growth that works for American families," Biden said in a statement prior to the meeting.

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In a separate opinion piece published by Wall Street Journal on Monday, Biden laid out his latest plan to fight inflation.

"I won't meddle with the Fed, but I will tackle high prices while guiding the economy's transition to stable and steady growth," Biden wrote.

By Anna Golubova

For Kitco News

Contact agolubova@kitco.com
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