Yellen says the administration is fighting inflation, admits she was wrong that it was ‘transitory’

The Treasury Secretary said that the White House has several strategies ready to go that will reduce inflation.

In an interview Tuesday with CNBC's Becky Quick, Fed Chair Janet Yellen said that the budget deficit and oil production could bring down prices at the fastest pace since the early days of the Reagan administration.

On the same day that Biden met with Powell, the Federal Reserve began fighting inflation with interest rate hikes.

The president wanted to do everything he could to lower the costs that Americans face for important items in their budget. She noted that the president can make a difference by acting on his own or working with Congress, as well as his support for deficit reduction.

In a statement before the meeting and an op-ed piece for the Wall Street Journal, Biden stressed the Fed's role to bring down prices.

The Federal Reserve has a primary responsibility to control inflation, according to a Journal piece.

The Fed has a dual mandate, which is maximum employment and price stability. I think that's the way it's phrased in the law, she said in an interview. The labor market is strong. That has been achieved, but inflation is way too high, and it is a big burden on American households. Maintaining full employment while bringing inflation down is the president's priority and I believe that is consistent with how the Fed sees its programs.

The Fed has approved two rate hikes this year. The Fed can evaluate the impact that monetary policy tightening is having after officials indicate that additional 50 basis point increases are likely over the next several meetings.

Both Powell and Yellen said that inflation was likely tobate once supply chain problems and outsized demand for goods returned to normal.

In an interview Tuesday, she admitted she was wrong.

I think I was wrong about the path that inflation would take, she said.

In the CNBC interview, Yellen said a spending package could have reductions on the costs of prescription drugs that would make a difference to every family that has drug costs as part of its household budget.

She said that it could make a difference very quickly, but most of the administration's plans would take longer.

Biden has blamed the Russia attack on Ukraine for record-high gasoline prices, but energy prices were already high before the war. Energy companies are sitting on thousands of oil leases that could allow greater production, though those leases likely would take years to develop, according to the administration.