Treasury Secretary Janet Yellen said she was wrong a year ago when she said she anticipated inflation would be "a small risk," "manageable" and "not a problem."
In an interview with CNN's Wolf Blitzer on Tuesday, she admitted she had misjudged the threat inflation posed.
"There have been unanticipated and large shocks to the economy that have boosted energy and food prices," Yellen told Blitzer. "And supply bottlenecks that affected our economy badly that I didn't, at the time, fully understand."
Yellen said looking ahead, "core inflation" is moving down but prices remain high, adding that the war in Ukraine is to blame for increasing oil and gas prices.
The comments came just after a White House meeting with Yellen, President Biden and Federal Reserve Chair Jerome Powell to talk about inflation.
"Respect the Fed's independence," Biden said. "I am not going to interfere with their critically important work. ... Chair Powell and other leaders of the Fed have noted that at this moment they have a laser focus on addressing inflation, just like I am," he said. "And with a larger complement of board members now confirmed, I know we'll use those tools and monetary policy to address the rising prices for the American people."
Yellen's concession also comes on a week when the Biden administration is touting its approach to tackling rising prices ahead of November midterms.
In a Wall Street Journal Op-ed published on Tuesday, the president said he would let the Fed take the lead in fighting inflation, urged Congress to pass clean energy tax credits and discussed tackling foreign ocean freight companies' export and transport fees.
But when asked questions about whether or not the administration misjudged inflation as "transitory," White House National Economic Council Director Brian Deese told reporters "that falls squarely into the category of things that we will leave to the independent judgment of the Fed" and that the president understands prices are a top issue.
As NPR reported, Powell has admitted inflation has been "more persistent" than he first expected.
The most recent Commerce Department data showed that consumer prices were up 6.3 percent in April, compared to a year ago. The Fed has begun raising interest rates aggressively, in an effort to bring prices under control.
New inflation data is expected to be released next week.
A Treasury spokesperson told NPR in an email that the comments made by Yellen were aimed at "pointing out that there have been shocks to the economy that have exacerbated inflationary pressures which couldn't have been foreseen 18 months ago, including Russia's decision to invade Ukraine, multiple successive variants of COVID, and lockdowns in China."
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