United States President Joe Biden met with Federal Reserve Chair Jerome Powell on Tuesday to stress the need to cool the highest inflation in 40 years and rein in soaring petrol, food and consumer goods prices.
The meeting was the first since the Fed chair was confirmed for his second term by the Senate earlier this month.
White House economic adviser Brian Deese called the meeting “very constructive.”
“The president underscored to Chair Powell in the meeting what he has underscored consistently including today — that he respects the independence of the Federal Reserve,” Deese said after the talks.
Deese also acknowledged the “transition” ahead for the US economy as the central bank hikes interest rates to more normal levels slowing growth in the process.
“We have run this first leg of the race at a very rapid clip that has put us in the strong position relative to our peers, but this is a marathon and we have to move and shift to stable resilient growth,” Deese added.
Also joining the president and central bank chief was US Treasury Secretary Janet Yellen, who served as Fed chair between 2014 to 2018.
Discussions focused on the unique standing of the US economy, which experienced its strongest growth in nearly four decades in 2021.
The government poured trillions of dollars in economic stimulus into the economy last year in an effort to jolt the nation out of a COVID-19 induced recession.
Now the White House is faced with runaway food and energy prices, which are top concerns for voters heading to the polling stations for November’s midterms. The Democratic Party is hoping to maintain control of the Senate and House of Representatives.
In a Wall Street Journal opinion piece published on Monday, Biden said the Federal Reserve has a “primary responsibility to control inflation”.
Biden also wrote 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.”
Where the Fed stands now
The Federal Reserve has already raised interest rates by three-quarters of a percentage point this year and plans to raise rates by half a percentage point more at each of its next two meetings.
The central bank has also left the door open for potentially more increases to come after that.
The Fed had previously expressed hope that inflation will in part level out on its own as companies sort out supply chain issues and consumers shift spending towards services.
While US consumer price growth did slow in April as petrol prices eased off record highs, Powell has made it clear that the Fed is no longer just counting on that.
Earlier this month, the Fed chief said that despite some encouraging economic signs that point to price pressures easing, it is “not a time for tremendously nuanced readings of inflation”.
The Powell-led Fed has been criticised by some economists for being slow to address high inflation by ending emergency support for the economy.