Biden, Powell meet while inflation grips consumers
President says rising prices are top economic priority, won’t meddle with Fed
WASHINGTON — President Joe Biden met with Federal Reserve Chair Jerome Powell at the White House on Tuesday, as part of an effort to sell Americans on a brightening view of the economy and reassure consumers that leaders in Washington are hard at work to slow rapidly rising prices.
Speaking to reporters at the start of the meeting, Biden reiterated that fighting inflation was his top economic priority and that he would not interfere with the Fed as it tries to tame rising prices.
That fight, Biden said, “starts with a simple proposition: Respect the Fed, respect the Fed’s independence, which I have done and will continue to do.”
The president added that Powell “and other members of the Fed have noted at this moment they have been laser-focused on addressing inflation like I am.”
The Fed has begun raising interest rates to slow down the economy, hoping that reining in consumer demand will eventually help bring price increases under control.
But while the central bank may help cool down the economy to a more sustainable path over time, the Fed’s moves are likely to hurt in the near term: Rate increases are making it more expensive for households and businesses to borrow money for big purchases, and they work to counteract inflation partly by slowing down hiring and wage growth.
Biden’s push to slow inflation puts Powell in a potentially awkward position. The president has said that he respects the Fed’s independence to set monetary policy and that he will not cajole the central bank to change interest rates. But Biden has also made clear that he expects the Fed to tame inflation without plunging the economy into a recession — a combination that could be difficult for Powell to pull off.
Inflation in the United States is running near its fastest pace in four decades, with prices rising for gas, food and rent. While price pressures have shown early signs of abating, it is unclear how large and sustainable that decline will be, given kinks in global supply chains and Russia’s war in Ukraine.
The squeeze hitting consumers comes at a tough time for the White House and Democrats, as the November midterm elections approach and voters cite inflation and the cost of living as top economic concerns.
Tuesday’s meeting was the first since Powell was renominated in November by Biden to lead the central bank and comes two weeks after his confirmation for a second term by the Senate.
The White House, along with the Fed, initially portrayed the inflation surge as a temporary side effect caused by supply chain issues as the U.S. emerged from the pandemic.
Republican lawmakers were fast to criticize Biden’s $1.9 trillion coronavirus relief package from last year as pumping too much money into the economy and causing more inflation.