Biden and Fed Chairman Powell to meet as inflation continues to weigh on consumers

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By Jarret Renshaw

(Reuters) – U.S. President Joe Biden will meet Federal Reserve Chairman Jerome Powell on Tuesday as historic inflation continues to empty Americans’ wallets.

The meeting, the first since Powell was confirmed for a second term by the Senate earlier this month, comes as Biden seeks to cut gas, food and consumer goods costs that have driven up the inflation at 40-year highs.

Biden will reiterate the independence of the Fed, note that the central bank has the tools it needs to fight inflation and discuss the U.S. and global economies, White House National Economic Council Director Brian Deese said on Tuesday. television interviews.

“We are in this transition from what has been a historic economic recovery – historic in the jobs created, historic in the wealth created for American families – and now we must move to more stable and resilient growth,” he said. he told MSNBC.

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U.S. stock index futures fell on Tuesday ahead of the meeting, scheduled for 1:15 p.m. (1715 GMT).

The U.S. economy grew at its strongest in nearly four decades in 2021, after the government poured billions of dollars in COVID-19 aid into the economy, fueling consumer spending that has helped rising prices.

A Department of Labor report earlier this month https://www.Reuters.com/business/us-weekly-jobless-claims-decline-moderately-2022-04-21 showed unemployment rolls dropping at lowest level in 52 years, helping to spur wage growth.

The Fed has already raised interest rates by 3/4 percentage point this year and expects to raise rates another half percentage point at each of the next two meetings, with potentially further increases at come later.

The Fed hopes that inflation will at least partly moderate on its own, as businesses resolve supply chain issues complicated by the pandemic, for example, and consumers redirect spending toward services.

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But Powell also made it clear that the Fed is off the hook and will raise interest rates as high as necessary. He sees high inflation as the main economic risk facing the country and controlling it as the Fed’s top priority in his second term, even if the process proves painful for households and businesses and pushes the rate slightly higher unemployment.

For Biden and the Democratic Party, that could mean a tough midterm election season, where they try to keep control of Washington.

In a Wall Street Journal op-ed on Monday, Biden said the Federal Reserve’s primary role is to control inflation.

Biden said his “predecessor demeaned the Fed and past presidents sought to influence his decisions inappropriately during times of high inflation. I won’t do that.”

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The Powell-led Fed has been criticized by some economists for being slow to deal with high inflation by ending emergency support for the economy and starting to raise interest rates.

U.S. consumer price growth slowed sharply in April as gasoline prices hit record highs, suggesting that inflation has likely peaked, although it is expected to remain high for a while. some time and keep the Federal Reserve’s foot on the brakes to cool demand.

Powell last week https://www.reuters.com/article/usa-fed-powell-inflation/feds-powell-not-time-for-tremendously-nuanced-readings-of-inflation-idUKW1N2UD02B said that despite some encouraging signs that price pressures could peak, the current environment is “not the time for extremely nuanced readings of inflation”, and U.S. central bank officials will continue to tighten policy until that inflation falls “convincingly”.

(Reporting by Jarrett Renshaw; Editing by Alison Williams, Heather Timmons and Mark Porter)

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