WASHINGTON — President Joe Biden vowed Tuesday he won’t interfere with the Federal Reserve’s efforts to curb inflation after the central bank’s move to raise interest rates this month sent markets spiraling.
“My plan to address inflation starts with a simple proposition: Respect the Fed. Respect the Fed’s independence,” Biden said in brief remarks kicking off an afternoon meeting with Federal Reserve chairman Jerome Powell.
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The meeting, which came at Biden’s invitation, is his first with Powell since the president appointed him to a second term in November as head of the Federal Reserve and their third meeting overall. Powell’s nomination was confirmed by Congress earlier this month as chair of the central bank and he was sworn in last week.
“My job as president is not only to nominate highly qualified individuals for that institution but to give them the space they need to do their job,” Biden said. “I’m not going to interfere with their critically important work.”
Powell did not make any public remarks to media members as the Oval Office meeting got underway. Treasury Secretary Janet Yellen also attended.
Biden, who has called inflation his “top domestic priority,” has struggled to find answers to a 40-year high in consumer prices for gas, food, housing, vehicles and other goods. It’s a major reason Biden’s approval rating has stayed hovering around 40%, adding to the political headwinds Democrats already face in trying to maintain power of Congress during this year’s midterm elections.
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Biden’s hands-off approach with the Federal Reserve is vastly different than the approach of former President Donald Trump, who repeatedly railed against the Federal Reserve, oftentimes publicly calling on Powell – whom he nominated in 2017 – to cut interest rates to boost the nation’s economy.
The Federal Reserve, which operates independently of the White House, in May raised its key short-term interest rate by a half percentage in a push to rein in consumer demand to tame inflation. Rates went from a benchmark range of .25% to 0.5% to a range of 0.75% to 1%, the Fed’s largest hike since 2000.
The central bank also said it will begin shrinking its $9 trillion in bond holdings next month, a strategy that will nudge long-term interest rates higher.
Yet other obstacles such as Russia’s war in Ukraine and ongoing supply chain issues remain outside the control of the central bank.
There are signs the inflation outlook is improving. Inflation stayed elevated in April, with consumer prices 8.3% higher than one year ago, but that was down from 8.5% in March, perhaps signaling that inflation has peaked. Still the average price for gas Tuesday was a record $4.62 per gallon, according to AAA, about $1.50 more than drivers were paying last Memorial Day weekend.
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“The U.S. is in a better economic position than almost any other country,” Biden wrote in a Wall Street Journal op-ed Tuesday. He noted that by the end of this year the U.S. economy will be larger, relative to its pre-pandemic size, than any other Group of 7 economy, according to the International Monetary Fund.
National Economic Council Director Brian Deese described Biden’s meeting with Powell and Yellen as “very constructive” during the White House press briefing. Deese said that Biden is “confident” that inflation can be brought down without sacrificing economic growth.
“This has been an uncertain and unexpected… recovery period,” Deese said. “Our focus right now is on what is the right policy to bring prices down without sacrificing all the economic gains that we’ve made.”
The president is expected to continue hammering against a proposal by Sen. Rick Scott, R-Fla., for all Americans to pay income tax, which the White House has worked aggressively to frame as the GOP alterative.
More:Soaring inflation slowed in April. Will price-weary shoppers get a bit of relief?
Reach Joey Garrison on Twitter @joeygarrison.
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