Political | Process

“I think I was wrong then about the path that inflation would take,” Ms. Yellen said in a CNN interview Tuesday evening. “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.”

Ms. Yellen’s remarks come as the administration is launching a renewed effort to improve Americans’ perceptions of the state of the economy, with inflation trending near a 40-year high.

She and President Biden met with Federal Reserve Chairman Jerome Powell on Tuesday to discuss steps both the administration and central bank are taking to address high inflation.

The Federal Reserve is mounting an aggressive move to combat inflation by raising interest rates. The central bank is also launching a plan to begin shrinking its $9 trillion asset portfolio by allowing securities to mature without reinvesting their proceeds into new ones, a move that could put upward pressure on interest rates.

The Biden administration, meanwhile, says it will do a month-long messaging push in June to highlight bright spots in the economy and advocate for Mr. Biden’s economic agenda.

Last year, administration officials repeatedly said they expected elevated inflation to be temporary. Ms. Yellen in March 2021 said in an interview with ABC that the U.S. economy faced a “small risk” of inflation. “I think it’s manageable,” she said.

In May 2021, she similarly told The Wall Street Journal that she didn’t anticipate an inflationary problem. More recently, administration officials have backed off characterizing the increase as temporary.

“We have a very strong labor market that’s been achieved, but inflation is way too high and it’s really a big burden on American households,” Ms. Yellen said on CNBC Wednesday. “And so maintaining full employment while bringing inflation down, that’s the President’s priority. And I believe that’s consistent with how the Fed sees it.”