President Joe Biden is due to meet Federal Reserve Chairman Jerome Powell as soaring inflation takes a bite out of Americans’ wallets.
Tuesday’s meeting will be the first since Biden reappointed Powell as head of the central bank and comes weeks after he was confirmed for a second term by the Senate.
The White House said the pair would discuss the state of the US and global economy and in particular inflation.
“The most important thing we can do now to move from a rapid recovery to steady, steady growth is to bring inflation down,” Biden said in an op-ed published Monday by The Wall Street Journal. “That’s why I’ve made fighting inflation my top economic priority.”
Inflation in the United States hit a 40-year high earlier this year, amid supply chain constraints caused by the global economy’s post-pandemic recovery and Ukraine’s invasion by Russia.
But the economy saw some welcome data on Friday, as the Commerce Department said inflation rose 6.3% in April from a year earlier, the first slowdown since November 2020 and a sign that high prices may finally be moderating, at least for now.
The inflation figure was below the four-decade high of 6.6% set in March. While high inflation continues to cause difficulties for millions of households, any slowdown in price increases, if prolonged, would bring some relief.
Powell pledged to keep raising the Fed’s short-term interest rate to cool the economy until inflation “falls clearly and convincingly.” These rate hikes raised fears that the Fed, in its drive to slow borrowing and spending, could push the economy into a recession. This concern has caused stock prices to fall sharply over the past two months, although markets rallied last week.
Powell signaled that the Fed would likely raise its benchmark rate by half a point in June and July, twice the size of the usual rate increase.
Biden, in his op-ed, signaled that the record pace of job creation in the aftermath of the pandemic would slow significantly, suggesting more moderate levels of 150,000 jobs per month instead of 500,000. He said “it will be a a sign that we are successfully entering the next phase of recovery, as this type of job growth is compatible with low unemployment and a healthy economy.”
Ahead of the meeting, Biden pledged not to interfere in Fed decision-making, but suggested he and Powell be aligned on fighting inflation.
“My predecessor debased the Fed, and past presidents sought to influence its decisions inappropriately during times of high inflation,” Biden wrote. “I will not do that. I have appointed highly qualified people from both parties to lead this institution. I agree with their assessment that tackling inflation is our main economic challenge right now.”