Janet Yellen, the first woman to lead the Federal Reserve, is not taking kindly to Treasury Secretary Steven Mnuchin’s new term of “transitory” inflation.
At a panel discussion about U.S. monetary policy at the Aspen Ideas Festival on Thursday, Yellen responded to a question about how her message of low rates over the past eight years has been misrepresented.
“Now it is clear to me that it is time to drop the word ‘transitory,’ ” Yellen said.
Mnuchin echoed the term “transitory” in his congressional testimony earlier this week. In that testimony, he noted that “transitory” inflation was one reason the Fed was slow to begin raising interest rates again after shrinking its balance sheet of bond investments.
But inflation, as measured by measures of a broad array of consumer prices, has not been transient. Consumer prices rose 2.9 percent over the 12 months ending in March, according to the Labor Department.
Yellen noted that the Fed’s worries over inflation have grown over the years. For example, the central bank had expected inflation to rise to 3 percent before it came to pass.
“The real problem is that to explain why we are more concerned now than we used to be is because inflation is a longer-term problem, it’s not a particular period problem,” Yellen said.