US Treasury Secretary admits she was wrong about threat of inflation and economic shocks

Lorraine says Biden ‘has to try do something’

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Appearing on CNN, Ms Yellen was confronted with her comments on inflation that she made approximately a year ago where she said she doesn’t “anticipate that inflation is going to be a problem”. As the global economy continues to tackle challenges, such as President Putin’s war in Ukraine and post-pandemic recovery, Biden met with the Federal Reserve Chair Jerome Powell and Ms Yellen to discuss inflation.

Ms Yellen previously said about the risk of inflation: “I think there’s a small risk and I think it’s manageable.”

She added: “I don’t anticipate that inflation is going to be a problem, but it is something that we are watching very carefully.”

On CNN the Treasury Secretary stated: “I think I was wrong then about the path that inflation would take.

“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.”

The President met with Mr Powell on Tuesday to reassure the central bank chief that there would be no political interference and he respected the Federal Reserve’s independence in trying to tackle inflation.

Following the meeting, White House National Economic Council Director Brian Deese said: “The President underscored to Chair Powell in the meeting what he has underscored consistently including today — that he respects the independence of the Federal Reserve.”

He added that the meeting was “very constructive”.

On Twitter President Biden said: “The most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down.

“That is why I have made tackling inflation my top economic priority.”

On CNN, Ms Yellen added that the President “believes strongly and is supportive of the independence of the Fed to take the steps that are necessary” to reduce inflation.

She also warned Americans that despite an encouraging sign of decline in core inflation data, “we can’t rule out further shocks”.

Ms Yellen noted that oil prices remain high and Europe is furthering sanctions on Russian oil.

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Earlier this month, Mr Powell noted that despite some signs that price pressures may be peaking, it is “not a time for tremendously nuanced readings of inflation” given the current climate.

He added that US central bank officials will keep tightening policy until inflation comes down in “a convincing way”.

In the Wall Street Journal, Biden attempted to reassure citizens saying: “The American people should have confidence that our economy faces these challenges from a position of strength.”

He concluded: “With the right policies, the US can transition from recovery to stable, steady growth and bring down inflation without giving up all these historic gains.”

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