U.S. President Joe Biden met with Federal Reserve Chair Jerome Powell on Tuesday to discuss inflation which he described as his “top priority”.
Prior to the meeting, Biden said he promised to “respect the Fed’s independence” and give them “the space they need to do their job.”
U.S. Treasury Secretary Janet Yellen also attended the meeting.
After the meeting, White House National Economic Council Director Brian Deese said Biden “underscored to Chair Powell” his earlier comments to respect the Fed’s independence, and called the meeting “very constructive.”
Deese flagged the impending transition ahead for the U.S. economy as the Fed lifts interest rates from the historic lows during the pandemic to more normal levels. The move is expected to slow demand and growth while easing price pressures.
“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 said in comments obtained by Reuters.
“We can actually take on inflation without having to sacrifice … all of those [labor market] gains.”
Biden’s meeting with the Federal Reserve chair is the first since Powell’s confirmation for a second term by the Senate in mi. It also comes as rising gas, food, and consumer good prices have sent inflation to 40-year highs.
Biden said his meeting with Powell aimed “to discuss my top priority, and that is addressing inflation.”
“My plan is to address inflation. It starts with a simple proposition: Respect the Fed and respect the Fed’s independence, which I have done and will continue to do,” Biden said.
“Chair Powell and other leaders of the Fed have noted, at this moment, they have a laser-focus on addressing inflation, just like I am,” he added.
“And with a larger complement of board members now confirmed, I know we’ll use those tools of monetary policy to address the rising prices for the American people.”
Powell has said he sees high inflation as America’s chief economic risk and that controlling it is the Fed’s top priority during his second term.
He has said he will ratchet up interest rates as high as needed, even if it is painful for households and firms, rather than count on inflation to moderate itself as companies sort out supply chain issues, and for consumer spending to shift toward services.
The Fed has already raised interest rates by 3/4 of a percentage point this year, with most Fed policymakers saying they expect to continue to raise rates until they reach around 2.5 percent by the end of this year, and further if needed.
The planned rate hikes will include a half percentage point increase at both their June and July meetings.
According to analysis from Reuters, this could see a difficult midterm election season for Biden and the Democratic party, where they are trying to maintain control of the Senate and House of Representatives. Biden in June plans a media blitz to make the case to Americans that the economy is strong.
Reuters contributed to this report.