WASHINGTON — Treasury Secretary Janet Yellen acknowledged Tuesday that she and Federal Reserve Chair Jerome Powell “could have used a better word” than “transitory” when describing the expected run of inflation in the U.S. economy. She added that she was hopeful it would soon be on the decline.
“I do expect inflation to remain high although I very much hope that it will be coming down now,” Yellen told the Senate Finance Committee during a hearing on the agency’s latest budget request. “I think that bringing inflation down should be our number one priority.”
The Federal Reserve and Treasury Department have been increasingly blamed by legislators and the public for allowing inflation to reach record highs — notably an 8.3 percent leap in consumer prices over the past year.
She told CNN last week that she did not fully understand the impact that unanticipated large shocks and supply bottlenecks would have on the economy.
“Look, I think I was wrong then about the path that inflation would take,” she said.
The hearing was an opportunity for lawmakers to press Yellen on the causes for inflation, when it may decline and the administration’s plans to reduce the pain on Americans.
“We now are entering a period of transition from one of historic recovery to one that can be marked by stable and steady growth,” she said. “Making this shift is a central piece of the president’s plan to get inflation under control without sacrificing the economic gains we’ve made.”
As for earlier pronouncements by Yellen and Powell that the U.S. inflation problem was transitory, Yellen allowed, “Both of us could have used a better word than transitory. There’s no question that we have huge inflation pressures. Inflation is really our top economic problem at this point.”
Inflation has shown signs of moderating but is likely to remain far above the Fed’s 2 percent target through the end of this year.
