Speaking yesterday, after meeting at the White House with President Joe Biden and Federal Reserve Chairman Jerome Powell, Treasury Secretary Janet Yellen said that the administration was working on several strategies for reducing inflation, Bloomberg reported. She specifically spoke about plans for dealing with high prescription drug and gasoline prices, as well as the budget deficit. 

Yellen also acknowledged that she had miscalculated the severity of the inflation crisis, saying in a CNN interview, “I was wrong about the path inflation would take. 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 at the time I didn’t fully understand.” She noted that new variants of COVID-19, lockdowns in China and Russia’s invasion of Ukraine all had a negative impact on the economy. 

Yellen also said, “The president emphasized his intention to do everything he can to lower the costs that Americans face for important items in their budget, CNBC reported.

Both before the meeting and in an op-ed piece for The Wall Street Journal, Biden stressed the Fed’s role in bringing down prices. In the Journal piece, he specifically said, “First, the Federal Reserve has a primary responsibility to control inflation.” Yellen,  who was Powell’s immediate predecessor as head of the Fed, also mentioned that dealing with inflation is a key responsibility of the Fed. 

“The Fed has a dual mandate and it is maximum employment and price stability. I think that’s the way it’s phrased in the law,” Yellen said in an interview on CNN’s “Squawk Box.” “But we are at full employment. 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. 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 its programs.” 

In early May, the Fed announced it would raise interest rates by half a percentage point—the largest increase since 2000-—in order to curb inflation. According to CNBC, Fed officials have indicated that additional 50 increases are likely over the next several meetings, after which it plans to evaluate the that monetary policy tightening is having. 

In his Journal op-ed, Biden argued that the U.S. economy remains strong, writing, “The U.S. is in a better economic position than almost any other country. According to the International Monetary Fund, the U.S. economy will be larger at the end of this year—relative to its prepandemic size—than any other Group of 7 economy. The U.S. economy may grow faster this year than China’s economy for the first time since 1976.”