Biden vows Fed independence ahead of meeting with Powell over inflation battle
Inflation crisis in focus at Biden, Powell meeting as sky-high prices weigh on US households
Bestselling author and Ramsey podcast host Rachel Cruze reacts to consumers taking out more money from their savings amid 40-year high inflation.
President Biden stressed the importance of maintaining the independence of the Federal Reserve ahead of a rare Oval Office meeting with Chairman Jerome Powell amid an inflation crisis that has frustrated Americans.
The two will focus on the state of the U.S. economy, particularly soaring consumer prices, when they meet at the White House on Tuesday. It marks the first meeting of its kind since Biden renominated Powell to lead the central bank for another four years and comes weeks after the Senate confirmed him for a second term, according to a record of the Fed chief’s public schedule.
INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH
"The most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down," Biden wrote in an op-ed published Monday in The Wall Street Journal. "That is why I have made tackling inflation my top economic priority."
A man shops at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022, as Americans brace for summer sticker shock as inflation continues to grow. ((Photo by JIM WATSON/AFP via Getty Images) / Getty Images)
Inflation has accelerated as a result of trillions of dollars in government stimulus, rapid consumer demand and supply chain disruptions stemming from the COVID-19 pandemic as well as the Russian war in Ukraine. Recent Labor Department data shows the consumer price index hit 8.3% in April – near a 40-year high.
While that's down a bit from the high notched in March, it was much higher than economists expected and underscores that inflationary pressures in the economy remain strong.
Fed policymakers raised the benchmark interest rate by 50 basis points earlier this month for the first time in two decades and have signaled that more, similarly sized rate hikes are on the table at coming meetings as they rush to catch up with inflation. Powell has pledged to keep ratcheting up the benchmark interest rate until inflation is "coming down in a clear and convincing way."
Biden vowed to refrain from interfering with the U.S. central bank and its war on inflation, despite growing fears on Wall Street that Fed officials may inadvertently trigger a recession with aggressive tightening.
Federal Reserve Chair Jerome Powell pauses during a news conference in Washington. (AP Photo/Manuel Balce Ceneta, File / AP Newsroom)
"The Federal Reserve has a primary responsibility to control inflation. My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation," Biden wrote, referring to former President Donald Trump, who frequently attacked the Fed and Powell. "I won’t do this."
The Fed head has acknowledged there could be some "pain associated" with reducing inflation and curbing demand but has pushed back against the notion of an impending recession, identifying the labor market and strong consumer spending as bright spots in the economy. Still, he has warned that a soft landing is not assured.
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"It's going to be a challenging task, and it's been made more challenging in the last couple of months because of global events," Powell said earlier this month during a Wall Street Journal live event, referring to the war in Ukraine and COVID lockdowns in China.