President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday after writing in a Wall Street Journal opinion piece that the U.S. central bank “has the primary responsibility for controlling inflation.” promise not to intervene.
Analysts say Biden’s moves with the Fed look smart.
“Allowing the Fed to pursue an independent monetary policy” is “not only good for the economy, it’s good for the president politically,” Chris Low, chief economist at FHN Financial, said in a statement Tuesday.
“President Trump did not win any favor by fighting the Fed,” Low added, referring to Biden’s predecessor, who often tweeted criticism of Powell after choosing him to head the central bank.
Read more: Biden promises Fed independence before meeting with Powell
Economists have warned that every president, whether Democrat or Republican, does not have the powerful tools to tackle high prices.
When asked by MarketWatch about Biden’s limited ability to cope with inflation, a senior White House economist said on May 20 that the question was whether the Fed’s job is to ensure the stability of prices and full employment.
“So, first of all, the president and his entire administration respect the independence of the Fed, and they also understand that this is largely their mandate: to address inflation,” said Cecilia Rouse, who heads the Council. of Biden Economic Advisers.
“We support the policy changes that are being made to address inflation. That said, the president is also doing what he can,” Rouse said, noting steps such as freeing up oil reserves and allowing summer gasoline with 15% ethanol E15 gasoline could provide an average of 10 cents per gallon savings on the limited number of gas stations where it is available.
I will see: As Biden fights inflation, economists warn that weapons for this battle seem “extremely limited”
This month, Biden has put his stamp on the central bank, after appointing four governors to the seven-member Fed board.
Before the Biden election was approved by the Senate, the Fed’s interest rate-setting committee was very much on the side of the hawks. But the balance has now shifted, said Ian Shephersdon, chief economist at Pantheon Macroeconomics.
“Much depends on the approach of the new governors, Lisa Cook and Philip Jefferson, none of whom were supposedly appointed to be hawks,” Shepherson said.
Another Biden candidate for Fed board, Michael Barr, is awaiting Senate action. Barr went through his confirmation hearing and is not expected to face difficulties in the Senate.
Analysts have stressed that Biden’s Democratic Party is on track for defeats in the November midterm elections if high prices persist. Americans ’frustrations with inflation are helping keep Biden’s approval ratings low and give Republicans a point of conversation ahead of the election.
Republicans are expected to regain control of the U.S. House of Representatives, and the PredictIt betting market offers an 87% chance of that result. The GOP also has a good chance of getting the Senate back 50-50, as PredictIt puts them at 77%.
Biden and Powell are scheduled to meet at the White House Oval Office around 1:15 p.m., with Treasury Secretary Janet Yellen, Powell’s predecessor to the Fed, also participating in the meeting.
Biden and his administration are making a concerted effort over the next month to communicate their successes so far on the economy, the way forward and the contrast with a Republican congressional plan presented by Florida Sen. Rick Scott. the White House. he said Tuesday.
Scott is chairman of the Senate Republican National Committee, but Senate Minority Leader Mitch McConnell has reprimanded him for his proposal, along with the Kentucky Republican. saying in March“We will not have as part of our agenda a bill that will increase taxes on half the American people and eliminate Social Security and Medicare in five years.”
US DJIA shares,
COMP,
it lost ground on Tuesday as investors watched the Biden-Powell meeting. The major equity indicators have fallen this year, with the S&P 500 SPX,
a 13% drop as investors worry about inflation, Fed interest rate hikes and the potential for a recession, although they made considerable gains last week, helped in part for the Fed minutes on Wednesday that suggested the central bank is open to rethinking plans to raise rates to control inflation.