US President Joe Biden received the head of the US central bank Jerome Powell on Tuesday for a rare interview, once morest a backdrop of galloping inflation. The Minister of the Economy made her mea culpa for not having anticipated the strong and lasting rise in prices.
Mr Biden, 79, discussed his ‘biggest priority: responding to inflation to successfully transition from a recovering economy to sustained and sustained growth’ with Mr Powell and Minister Janet Yellen in the office oval. Fed members are ‘totally focused’ on price control which is, along with supporting jobs, their mission, the US president said.
Jerome Powell did not speak to reporters. The Fed declined to provide further details.
Treasury Secretary Janet Yellen, for her part, acknowledged at the end of the day that she had not anticipated the strength of this price surge in 2021: “I was wrong, then, on the path that inflation would take ‘, she pointed out on the CNN channel. ‘We have to fight inflation […] preserve the progress made in the labor market,” she stressed.
Independence from the Fed
That is, however, over with the record numbers in job gains and economic growth, which were linked to the economic recovery, she warned: ‘We are looking at steady and stable growth and a decline in the inflation’.
The meeting was unusual, as the US government generally stayed away from the Fed, an independent institution. But the White House host said his ‘plan’ to control prices ‘began with a simple premise: respect the Fed, respect the independence of the Fed’.
The Fed assured that it would do everything to bring inflation back into line. It has started to raise its key rates vigorously and should continue. This policy also has the effect of pushing up the rates charged to borrowers by commercial banks, which tempers demand and, ultimately, prices.
Inflation is blessed bread for the Republican opposition, a few months before legislative elections, which risk costing the Democrats their very slim parliamentary majority.
/ATS
