Biden meets Fed chairman Powell as inflation bites into American wallets

President hopes to convince voters that economy is doing well before crucial midterm elections

Federal Reserve Chairman Jerome Powell looks on as President Joe Biden nominates him for a second four-year term on November 22, 2021. Reuters

US President Joe Biden met Federal Reserve Chairman Jerome Powell on Tuesday as soaring inflation takes a bite out of Americans’ wallets — and the president’s public approval.

Tuesday’s meeting is the first since Mr Biden renominated Mr Powell to lead the US central bank and comes weeks after his confirmation for a second term by the Senate. It also represents something of a reversal by Mr Biden as inflation has evolved as a threat.

"The president underscored to Chairman Powell in the meeting what he has underscored consistently including today - that he respects the independence of the Federal Reserve," White House National Economic Council Director Brian Deese said after the meeting, calling it "very constructive".

Mr Deese also pointed to the "transition" facing the US economy, as the Fed lifts interest rates to more normal levels to dampen demand and ease price pressures, but 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," Mr Deese said.

"We can actually take on inflation without having to sacrifice ... all of those [labour market] gains."

The president asserted in April 2021 that he was “very fastidious about not talking” with the independent Fed and wanted to avoid being seen as “telling them what they should and shouldn’t do”.

The White House has increasingly sought to shift responsibility for inflation to the Fed in public comments, as polls show rising prices are the top concern among voters as November’s midterm elections approach.

In an op-ed published on Monday in The Wall Street Journal, Mr Biden said the Fed has “a primary responsibility to control inflation”.

“My predecessor demeaned the Fed and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation,” Mr Biden wrote. “I won’t do this.”

Former president Donald Trump regularly criticised the central bank, saying it should have been more aggressive in cutting interest rates, and at one point said he was considering demoting Mr Powell.

Paul Volcker, a former chairman of the Fed, said in his autobiography that he was once invited to a meeting with former president Ronald Reagan at the White House where aides told him not to raise interest rates before the election.

Agencies contributed to this report

Updated: May 31, 2022, 10:44 PM