White House says Fed push is working

Economic adviser Rouse tells CNN inflation measures are having an effect

The Federal Reserve’s interest-rate increases to bring inflation under control are starting to work, while President Joe Biden is doing everything possible to support the U.S. central bank, two administration economic advisers said.

“What we can see in the economic data is the Fed is focused on bringing down inflation,” Cecilia Rouse, chair of Biden’s council of economic advisers, said on CNN’s “State of the Union” on Sunday. “And we are starting to see signs that the actions they are taking is having an effect.”

Inflation is spreading deeper into the U.S. economy, slamming the door on hopes that the Fed will dial back rate increases that threaten to tip the U.S. — and perhaps the world — into recession. The Fed has boosted its benchmark target by 3 percentage points this year to a range of 3% to 3.25%.

Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year ago, outpacing forecasts and triggering a slide in U.S. bond markets, as investors bet that the Fed will go for two more 75 basis-point increases this year.

That spells trouble for a U.S. economy that’s already been slowing down, as soaring prices eat into paychecks while higher borrowing costs crush the housing market. Last week’s inflation report showed broad price pressures with big jumps in the cost of food, shelter and medical services.

“We are doing all we can to ease inflationary pressures,” White House economic adviser Jared Bernstein said. “It is going to take some time.”

Biden’s options include further deploying the Strategic Petroleum Reserve, Bernstein said on “Fox News Sunday.”

“The fact is there is capacity to use the SPR to deal with some of the energy shocks we’re seeing in the world,” he said. “But I’m not saying we will. That’s up to the president to decide, he hasn’t made that decision yet.”

“There is a lot of tailwind in this economy, a lot of strength,” Bernstein said. “We actually believe probability for soft landing is good.”

Biden said on Thursday that the price of U.S. gasoline is “still too high and we need to keep working to bring it down.” He pledged he’d “have more to say about that” this week.

Sen. Bernie Sanders, I-Vt., said the Fed is “hurting the situation” and suggested that the wealthy should pay more in taxes instead.

Inflation “is a global issue,” he said on NBC’s “Meet the Press.” “But at a time when working families are struggling when the people on top are doing phenomenally well, I don’t think you go after working people.”

BIDEN: U.K. TAX CUT PLAN ‘A MISTAKE’

President Joe Biden on Saturday called embattled British Prime Minister Liz Truss’ abandoned tax cut plan a “mistake,” and said he is worried that other nations’ fiscal policies may hurt the U.S. amid “worldwide inflation.”

Biden said it was “predictable” that the new prime minister on Friday was forced to walk back plans to aggressively cut taxes without identifying cost savings, after Truss’ proposal caused turmoil in global financial markets. It marked an unusual criticism by a U.S. president of the domestic policy decisions of one of its closest allies.

“I wasn’t the only one that thought it was a mistake,” Biden said. “I disagree with the policy, but that’s up to Great Britain.”

Biden’s comments came after weeks of White House officials’ declining to criticize Truss’ plans, though they emphasized they were monitoring the economic fallout closely. He was speaking to reporters at an Oregon ice cream shop where he made an unannounced stop to promote the candidacy of Democratic gubernatorial candidate Tina Kotek, as Democrats across the country face a tough political environment amid GOP criticism of their handling of the economy.

Biden said he was not concerned about the strength of the dollar — it set a new record against the British Pound in recent weeks — which benefits U.S. imports but makes the country’s exports more expensive to the rest of the world.

The president said the U.S. economy “is strong as hell.”

“I’m concerned about the rest of the world,” he added. “The problem is the lack of economic growth and sound policy in other countries.”

Said Biden: “It’s worldwide inflation, that’s consequential.”