Biden says Fed 'should take whatever steps it deems necessary' to respond to inflation

[BumRushDaShow]

Source: Washington Post



President Biden on Monday said that he made clear to Federal Reserve Chair Jerome H. Powell that the central bank should take any steps it believes are needed to combat rising inflation and support the economic recovery. “As I made clear to Chairman Powell of the Federal Reserve when we met recently, the Fed is independent,” Biden said during a speech about the economy. “It should take whatever steps it deems necessary to support a strong, durable economic recovery.”

Monday’s remarks revealed direct communication between Biden and Powell about inflation, as prices are increasing faster than many policymakers and economists projected. The administration has continuously said over the past few months price hikes will be temporary. But new coronavirus cases, and in particular, the highly transmissible delta variant, loom over that picture and complicate Biden’s report card for booming economic growth.

Fed officials have said they have no plans to raise interest rates any time soon to respond to inflation, since they believe prices will simmer back down as the economy heals. The White House and leaders at the Fed share the view that inflation is a feature of an economy clawing back from the pandemic recession.

Still, the inflation readings are crucial for how policymakers — in the White House and at the Fed — chart the economic recovery. Biden on Monday used the price increases to advocate for his infrastructure package, saying the investments would create a more resilient supply chain for businesses and workers.

Read more: https://www.washingtonpost.com/us-policy/2021/07/19/biden-powell-inflation-economy/?utm_medium=social&utm_campaign=wp_main&utm_source=twitter

[OneCrazyDiamond]

1. If they are gonna raise the rate,

I hope they do it this year. Next year is an election year. All of The House and 1/3 of the Senate is up in 2022.

[asiliveandbreathe]

2. Food and fuel..increased costs as so many here have been talking about..

Rents are sky high in many places...

Some are predicting, due to inflation Social Security benefits could increase in 2022 by as much as 6.1%..the highest since 1983..of course we need to watch the next 3 months..and, what will Medicare costs be..

https://www.thinkadvisor.com/2021/07/13/social-security-cola-estimate-for-2022-raised-to-6-1/

The annual cost-of-living adjustment, or COLA, for Social Security benefits in 2022 — usually announced in October — could be 6.1%, the highest since 1983, based on Tuesday’s Consumer Price Index announcement, according to Social Security and Medicare policy analyst Mary Johnson of the Senior Citizens League, which estimated the 2022 COLA at 5.3% a month ago.

“This is the highest COLA I’ve ever estimated in my 26-plus years of researching the annual inflation adjustment,” Johnson told ThinkAdvisor.

More at link

[peppertree]

3. Careful what you wish for...

President Jimmy Carter and his Fed Chair appointee, Paul Volcker, in 1979.

Volcker made defeating inflation his top priority, and eventually succeeded - but not before pushing the economy into its worst recession in over 40 years, thus paving the way for Reagan.

[IronLionZion]

4. But if it happens early enough, then the economy should recover

in time for Biden's reelection. For Volcker's policies it was right at the end of Carter's term.

[bucolic_frolic]

5. Experts are unanimous in their ambiguity over Fed policy

Most say a major slowdown is dead ahead. Some believe QE as a policy is spent and causing interest rates to rise rather than fall, and consumers to hunker down rather than spend. Yet houses are scarce and expensive, autos the same.

Spent much of the weekend watching recent interviews with headline investors. Stick to solid earnings with pricing power in the face of inflation was the advice. A price war may break out between US and Chinese tech companies, says another.

Most agree gold is telling a tale - deflation soon, but not permanently. It may be a different picture in 15 months.

Pres. Biden! The Fed has conflicting goals. Good to push the blame onto them. Powell has earned it, but he learned from Bernanke and Yellin.

[Buckeyeblue]

6. At a certain point consumers will refuse to pay more

Gas prices being higher means construction is up. I don't really mind where they are. I think prices in general will come down as inventory goes up.

The worst part of low interest rates is that you have to put your money in the stock market to get any type of gain. I wish we had good alternatives to encourage saving.