Treasury Secretary Janet Yellen says she regrets saying “inflation was transitory"

Treasury Secretary Janet Yellen says she regrets saying “inflation was transitory."

Treasury Secretary Janet Yellen stated on Wednesday that inflation could experience a turbulent path back to normalcy following consecutive reports indicating a rebound in price pressures within the U.S. economy at the beginning of the year.

During an interview with FOX Business' Edward Lawrence, Yellen addressed concerns about stagflation and asserted that progress on inflation has not come to a halt.

"I wouldn't expect this to be a smooth path month to month, but the trend is clearly favorable," she said. "That said, President Biden's top priority is addressing the issue of high costs that concerns so many Americans."

In 2021 and 2022, prices for various goods, including groceries, new cars, and health insurance, surged due to rampant inflation. This inflation was caused by disruptions in the global supply chain resulting from the COVID-19 pandemic, an extremely tight labor market, and increased consumer demand fueled in part by stimulus cash.

While inflation has significantly decreased from its peak of 9.1% in June 2022, it remains above the Federal Reserve's 2% goal. Compared to January 2021, shortly before the inflation crisis began, prices have risen by a remarkable 18.49%.

However, progress on inflation has largely plateaued since June, with the consumer price index remaining at or above 3% for the past nine months. This has raised concerns on Wall Street about the possibility of "stagflation," which is characterized by soaring consumer prices and high unemployment, indicating economic stagnation alongside high inflation.

Fears of stagflation rose in 2022 as the Fed began aggressively raising interest rates to combat high inflation. However, these fears largely subsided last year as signs emerged that price pressures were easing without a substantial negative impact on economic growth.