Secretary of the Treasury Janet Yellen on Tuesday admitted to Congress that she and Federal Reserve Chair Jerome Powell were wrong to term inflation "transitory."

Appearing before the Senate Finance Committee, Yellen was asked by Sen. John Thune, R-S.D., whether she still viewed inflation, "which is near a 40-year high, as transitory."

"Well, when I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of COVID that would be scrambling our economy and global supply chains," Yellen said, "and I was not envisioning impacts on food and energy pricing we have seen from Russia's invasion of Ukraine.

"As Chair Powell indicated himself, both of us probably could have used a better term than 'transitory.' There's no question that we have huge inflation pressures that inflation is really our top economic problem at this point."

Yellen last week said she had been wrong about the path inflation would take, but said taming price hikes was President Joe Biden's top priority and he supported the Federal Reserve's actions to achieve that.

"We can't rule out further shocks," Yellen told CNN on May 31.

Yellen told senators Tuesday that difficulties remained despite strong economic growth and "historically low" unemployment.

"To dampen inflationary pressures without undermining the strength of the labor market, an appropriate budgetary stance is needed to complement monetary policy actions by the Federal Reserve," Yellen told the finance committee.

With Biden's 2023 budget proposal the focus of the committee hearing, Yellen said the plan puts forth "smart, fiscally responsible investments, cutting deficits and keeping the economic burden of debt low."

She added Biden's clean energy initiatives and policies to reform prescription drug pricing, "could help lower the costs paid by American consumers."

Yellen spoke on a day the American Automobile Association said the average price of gas per gallon in the U.S. was $4.919.

The Washington Post last week reported Biden and Powell were slow to recognize and act on inflation as it first emerged and continued to rise.

Instead, the Post said, Biden administration and policymakers were more focused on supplying stimulus to the U.S. economy to counter the pandemic and fortify the labor market.

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