Treasury Secretary Janet Yellen stated that she feels sorry for characterizing inflation in 2021 as “transitory,” a term used by several Federal Reserve and Biden administration officials to describe the pandemic-induced price surges they initially believed would be short-lived.
“I regret saying it was transitory. It has come down. But I think transitory means a few weeks or months to most people,” Yellen mentioned during an interview with FOX Business Network’s Edward Lawrence on Monday.
Headline inflation fell to 3.2 percent year-over-year in February from its 9.1 percent peak in June 2022, a significant improvement but still higher than the Fed’s mandate to keep price increases to 2 percent annually.
Fed Chair Jerome Powell, who was also dinged for initially calling inflation transitory, and the central bank have hiked interest rates from near-zero in March 2022 to a range of 5.25 percent to 5.5 percent to try to curb inflation by cooling demand.
While many economists feared the rate hikes could push the economy into a recession a year ago, it now looks like the U.S. economy could be coming in for a rare “soft landing,” the term for slowing down the economy just enough to bring down high prices without triggering a recession.
The runway for the soft landing may be a bit bumpy as inflation is proving to be stickier than usual, but Yellen, a former Fed chair, was optimistic about the overall downward trend in price pressures.
“I wouldn’t expect this to be a smooth path month to month, but the trend is clearly favorable,” Yellen said.
