Biden Says Inflation ‘Temporary,’ Affirms Fed Independence
(Bloomberg) -- President Joe Biden said he believes the surge in U.S. inflation is temporary and that he has told Federal Reserve Chairman Jerome Powell that he respects the central bank’s independence.
Biden said Monday at the White House that recent price increases are “temporary,” countering Republican arguments that the president’s economic spending plans would cause inflation to spiral out of control.
But he also emphasized that he wouldn’t interfere with the central bank’s policies: “As I made clear to Chairman Powell of the Federal Reserve when we met recently, the Fed is independent. It should take whatever steps it deems necessary to support a strong and durable economic recovery.”
The U.S. saw the largest surge in consumer prices in more than 12 years last month, with a Labor Department gauge rising 5.4% compared to one year ago. The House Republicans’ campaign arm targeted vulnerable Democrats with online ads around the July 4 holiday decrying price increases for “burgers, buns, propane, gas.”
A significant portion of the recent inflation is tied to sectors experiencing parts shortages or surging demand stemming from the economy’s reopening, including cars, hospitality and lumber -- a point stressed by Biden in his remarks.
Biden’s speech also comes at a critical juncture in the debate over his $4 trillion economic plan. The bipartisan group authoring a $579 billion infrastructure package is rushing to complete its work before an expected test vote on Wednesday. The deadline is also intended to force Democrats to rally around the $3.5 trillion budget blueprint that contains many of the president’s social spending priorities.
“If your primary concern right now is inflation, you should be even more enthusiastic about this plan,” Biden said, arguing that the fiscal boost would help new businesses, increasing competition and driving down prices.
Meanwhile, the administration is concerned that stalled vaccination rates in the U.S. could allow variant strains of the coronavirus to spread and hinder the nation’s economic recovery.
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