President Joe Biden on Tuesday (May 31) holds a rare White House meeting with the head of the Federal Reserve, Jerome Powell, to discuss soaring inflation and White House attempts to tame the politically damaging price surge ahead of midterm elections.
In their first such meeting this year, Biden and Powell will discuss the state of the American and global economy, the White House said, with an emphasis on inflation.
This is Biden’s top economic priority, the White House said, as we transition from a historic economic recovery to stable, steady growth that works for working families.
Inflation of more than 8 per cent is casting a heavy shadow on Biden’s claims to be steering the US economy back to health after the COVID-induced crash.
Employment is back near pre-pandemic levels and growth is strong, but savage price increases for essentials including food and fuel are driving growing public dissatisfaction.
The Fed has raised rates three quarters of a percentage point, kicking off what central bank officials say could be a series of hikes aimed at calming down the economy, although there are fears that the unintended result may be recession.
Federal Reserve Governor Christopher Waller said Monday that he backs several more half-point rate hikes – “until I see inflation coming down closer to our 2 per cent target.
Biden is scrambling to ease the pressure on American consumers ahead of November midterm elections in which his Democrats are forecast to lose control of Congress to the Republicans.
Biden’s own approval ratings are barely in the 40 per cent range, reflecting his inability to sell voters on his upbeat message of US economic recovery.
As the election approaches, Biden has pivoted to more aggressively trying to explain the inflation phenomenon as a byproduct of forces beyond his control.
These include the Russian invasion of Ukraine, which triggered Western sanctions disrupting the huge Russian energy industry.
President Vladimir Putin’s invading forces, meanwhile, have all but put a halt to Ukraine’s important wheat exports.
Biden calls the effect Putin’s price hike.
Writing in the Wall Street Journal on Monday, Biden underlined the independence of the Federal Reserve, but noted that the central bank has a primary responsibility to control inflation.
Biden recalled that his predecessor Donald Trump frequently launched political attacks on the Fed and that other presidents had also sought to influence its decisions inappropriately during periods of elevated inflatio.
I won’t do this, he pledged.
In the op-ed, Biden said his long-term plan for economic health includes easing the pace of post-COVID recovery to more sustainable levels, boosting economic productivity and reducing the federal budget deficit.