Treasury Secretary Says She Was ‘Wrong’ on Inflation Forecast

In an interview with Wolf Blitzer on CNN’s The Situation Room that aired Tuesday evening, Treasury secretary Janet Yellen said she misjudged the trajectory of inflation in the U.S.

Blitzer mentioned Yellen’s comments in 2021 that the risk of inflation was not high.

“Was it a mistake, Madame Secretary, to downplay this inflation risk? Did that contribute to the problems we’re all seeing right now?” Blitzer asked.

“I think I was wrong then about the path that inflation would take,” Yellen replied. “As I mentioned, there have been unanticipated and large shocks to the economy — the boosted energy and food prices and supply bottlenecks that have affected our economy badly — that at the time I didn’t fully understand.”

The Consumer Price Index hit 8.3 percent in April 2022 compared with the same month in 2021. The CPI hit 8.5 percent in March 2022 over March 2021, the highest twelve-month increase since 1981.

The Congressional Budget Office predicted in a report released last week that inflation will steadily decrease but continue into 2023.

Yellen previously said the risk of inflation was “manageable” in an interview on ABC’s This Week in March 2021.

“Is there a risk of inflation? I think there’s a small risk. And I think it’s manageable,” Yellen said at the time, later adding, “To get a sustained high inflation like we had in the 1970s, I absolutely don’t expect that.”

In October 2021, Yellen said she expected inflation would persist until the second half of 2022.

“On a twelve-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement . . . by the middle to end of next year, second half of next year,” Yellen told CNN’s State of the Union.