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May 31, 2022
BIDEN, IN RARE POWELL MEETING, SEEKS TO DEFLECT INFLATION BLAME
by Bloomberg News
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(Bloomberg) — President Joe Biden used a rare meeting with Federal Reserve Chair
Jerome Powell to declare that he’s respecting the central bank’s independence –
while simultaneously shifting responsibility for taming decades-high inflation
ahead of the November midterms.
Biden seized on the Oval Office session to argue that while fighting price
increases is his top priority, that work was primarily the purview of the
Federal Reserve.
“My plan is to address inflation. That starts with a simple proposition: respect
the Fed, respect the Fed’s independence, which I have done and will continue to
do,” Biden said.
It’s Biden’s third in-person session with Powell since taking office, and
recalls the stakes when Ronald Reagan met with then-Fed chief Paul Volcker
almost four decades ago as he sought re-election amid galloping price pressure.
Biden has been attempting to show he’s maximizing efforts to curb the hottest
inflation in 40 years heading into November midterms, in which Democrats’ risk
losing their slim congressional majorities.
The White House has increasingly sought to shift the burden for battling prices
to the Fed in public comments, as polls show rising costs are voters’ top
concern. In an op-ed published Monday in the Wall Street Journal, Biden said the
Fed has “a primary responsibility to control inflation.”
Biden said Tuesday that his his role as president is to give the Fed “the space
they need to do their job, adding, “I’m not going to interfere with their
critically important work.”
FED INDEPENDENCE
Modern presidents, with the exception of Donald Trump, have made a point of
publicly declaring their commitment to Fed independence and kept any criticism
or advice private.
Trump broke with that tradition, regularly criticizing the central bank, arguing
it should have been more aggressive in cutting interest rates, and at one point
saying he was considering demoting Powell.
Biden sought to draw a contrast with Trump, writing in the op-ed that his
predecessor “demeaned the Fed, and past presidents have sought to influence its
decisions inappropriately during periods of elevated inflation. I won’t do
this.”
The president’s message to the Fed in Tuesday’s meeting was that he “plans to
stay out of their way,” Cecilia Rouse, chair of the Council of Economic
Advisers, told Bloomberg Television.
“The President wants to say, go forth and do what you need to do,” Rouse said.
Biden renominated Powell for a second four-year term at the Fed’s helm,
restoring the tradition of keeping the chair that he inherited from the previous
administration in place. Powell was confirmed by the Senate earlier this month
and was sworn into office last week.
Even so, White House economic adviser Brian Deese defended Tuesday’s meeting,
saying it was “standard practice for presidents and chairs of the Federal
Reserve to meet from time to time to share views on the economy.”
Biden will use his session to stress that he’s giving the central bank “space to
operate” independently to address the inflation crisis, Deese, who attended the
meeting along with Treasury Secretary and former Fed Chair Janet Yellen, said in
an interview with Bloomberg Television earlier Tuesday.
The central bank answers to Congress, which has given it a dual mandate to
pursue price stability and maximum employment, though presidents do get to
select the Fed’s seven governors including the chair and two vice chairs. As a
result, White House officials usually try to avoid commenting on monetary
policy.
Trump flatly ignored past practice and regularly castigated Powell for raising
interest rates, calling him “clueless” and asking if he was a “bigger enemy”
than Chinese President Xi Jinping.
At one point Trump even consulted advisers on whether he could fire Powell, who
he’d promoted to chair. Powell stood his ground, publicly confirming that he
would not resign if asked to by the president but otherwise declining to comment
on the barrage of often belittling criticism.
TOP PRIORITY
Powell, who has been criticized for being too slow in confronting inflation,
also calls it his top priority and has launched the most aggressive tightening
campaigns in decades.
Data released Friday showed the central bank’s preferred gauge of price
pressures, the personal consumption expenditures price index, rose by 6.3% last
month from April 2021 — more than three times the Fed’s 2% target.
Officials raised interest rates by a half-percentage point earlier this month
and Powell signaled they plan to follow up with increases of the same size in
June and July, even as they start shrinking their massive balance sheet.
Financial markets have swung sharply as investors fret the Fed could trigger a
recession in its efforts to tame prices. Officials — who admit this will be a
challenge — are aiming for a soft landing that cools demand by raising the cost
of borrowing on everything from homes to autos, but doesn’t push companies to
lay off workers.
The U.S. labor market is historically tight, with April’s unemployment rate of
3.6% near a 50-year low and two job vacancies for every one person looking for
work. That’s pushing up wages and stoking inflation, alongside price rises
caused by Covid-19 supply-chain tangles and the impact on energy and food costs
of Russia’s invasion of Ukraine.
In addition to inflation, Biden and Powell will discuss the state of the U.S.
and global economy and the recent confirmation of Lael Brainard, Lisa Cook and
Philip Jefferson to the Fed board, a White House official said.
Biden has urged the Senate to also confirm Michael Barr as the Vice Chair for
Supervision of the Federal Reserve, a key slot that oversees the banking
industry.
STOCK BULLS GET REPRIEVE AS POWELL SIGNALS A LIMIT TO AUSTERITY
Under no pressure to throw investors a bone, Jerome Powell nevertheless did,
igniting the biggest stock market rally on the day of a Federal Reserve meeting
in a decade.
May 4, 2022
In "News"
FED OFFICIALS STAY COURSE ON HALF-POINT HIKES DESPITE HOT PRICES
Federal Reserve officials face pressure for more aggressive action after a
hotter-than-expected inflation reading for April, though so far officials are
sticking with their strategy to keep raising interest rates by a half point at
each of their next two meetings.
May 11, 2022
In "News"
FED DASHES COLD WATER ON SHOCK-AND-AWE HIKE OF 75 BASIS POINTS
Federal Reserve officials are showing scant support for what would be the most
drastic single policy tightening in almost three decades, though they’re on
board with a series of still-large moves aimed at curbing an inflation spiral.
Apr 24, 2022
In "News"
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Comments (3)
* on Jun 1 2022, Brandon says:
In typical Biden fashion… he’s a day late and a dollar short
> Reply to Brandon
* on Jun 1 2022, Elliott Server says:
I don’t agree. There are certain realities that Biden has to deal with
regardless of who created them. The inflation today is much more
realistically attributable to Covid related supply chain issues, the
invasion of Ukraine by Putin and certain policies of the prior
administration that created too much money in the hands of too few people.
> Reply to Elliott Server
* on Jun 1 2022, JoRoPo says:
Elliott -you’re not paying attention – the $1400 handouts came from Biden
– discouraging fossil fuels has been Biden (although he wants Saudi
Arabia and Venezuela to send more oil) – ending energy independence –
vowing to raise taxes on the wealthy (those that create jobs) and
corporations means prices will increase (inflation) to offset higher
taxes – vowing to institute more social programs pumps more federal money
INTO the economic system – definition of Inflation = too much money
chasing too few goods, NOT too much money in the hands of too few people-
– some of current inflation can be attributed to Covid 19 and some to
Russia, BUT they are NOT the primary reasons – Brian Meese, Biden’s
economic advisor is NOT an economist…he’s an attorney….from a very good
law school, but Biden needs an economist not a lawyer – Biden’s policies
on border control, covid 19, fossil fuels, money supply are counter
productive to a strong economy – this administration is not strong
domestically and internationally –
> Reply to JoRoPo
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